Treasury Yields Spike After Data; Euro Drops: Markets Wrap

Treasury yields climbed, with economic data bolstering the case for the Federal Reserve to keep interest rates higher for longer in a bid to bring inflation back to its 2% target. The euro dropped.

(Bloomberg) — Treasury yields climbed, with economic data bolstering the case for the Federal Reserve to keep interest rates higher for longer in a bid to bring inflation back to its 2% target. The euro dropped.

Two-year yields, which are more sensitive to imminent policy moves, topped 5%. The dollar advanced. S&P 500 contracts pared gains. Prices paid to US producers increased by the most in more than a year, while retail sales rose as a jump in gas prices limited spending on other merchandise. The euro fell after the European Central Bank raised rates, but signaled it intends to stay on hold for now. West Texas Intermediate oil hit $90 a barrel for the first time since November.

United Auto Workers President Shawn Fain said the union and major Detroit automakers are still far apart on a new labor contract, threatening to strike select plants at each company, and possibly adding others. While a work stoppage could still be avoided altogether, the UAW and General Motors Co., Ford Motor Co. and Stellantis NV are approaching a strike deadline. The union’s current labor contract expires late Thursday night.

Bridgewater Associates LP founder Ray Dalio said he doesn’t want to own bonds and prefers cash, highlighting difficulties investors face as global central banks try to manage inflation.

“I don’t want to own debt, you know, bonds and those kinds of things,” the billionaire said Thursday at the 10th Milken Institute Asia Summit in Singapore, when asked to don the hat of a fresh macro investor in the current landscape. “Temporarily right now, cash I think is good.”

Fiscal policy risk is more likely to drive up US bond yields than further tightening from the Federal Reserve, said the central bank’s former vice chair Richard Clarida.

“If rates do move up, I don’t think it’s going to be because of the Fed, it’s going to be because of the fiscal dysfunction in Washington,” Clarida, now global economic advisor at Pacific Investment Management Co., told Bloomberg Television in an interview. “Even though the Fed’s very powerful, it’s not the only driver of rates and fiscal policy is also a factor as well.”

Corporate Highlights

  • Adobe Inc. is due to report ist results after the closing bell, and the earnings call will likely be focused on its artificial-intelligence offerings after the company revealed its generative tools will cost less than competitive products.
  • AMC Entertainment Holdings Inc. climbed as the cinema chain said it raised $325.5 million through the sale of 40 million shares.
  • HP Inc. fell after Warren Buffett’s Berkshire Hathaway said it sold $158.5 million worth of shares of the personal-computer maker.
  • Visa Inc. dropped as the company took the first step to let the biggest US banks sell their shares in the world’s largest payments network. While Jefferies expects the proposal to produce a near-term overhang in the stock, Morgan Stanley believes it might relieve some pressure.
  • SoftBank Group Corp. satisfied its ambitions for Arm Holdings Plc by raising $4.87 billion in the year’s biggest initial public offering, while resisting the temptation to try for more.
  • Microsoft Corp.’s attempt at avoiding deeper European Union scrutiny of its Teams video-conferencing app fell flat with the bloc’s antitrust enforcers readying a formal complaint against the firm’s conduct.
  • Lazard Ltd.’s Peter Orszag is setting fresh targets for the 175-year-old investment bank, including doubling revenue by the end of the decade.


Key events this week:

  • US retail sales, PPI, business inventories, initial jobless claims, Thursday
  • China property prices, retail sales, industrial production, Friday
  • US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday

Some of the main moves in markets:


  • S&P 500 futures rose 0.3% as of 8:31 a.m. New York time
  • Nasdaq 100 futures rose 0.2%
  • Futures on the Dow Jones Industrial Average rose 0.2%
  • The Stoxx Europe 600 rose 0.6%
  • The MSCI World index was little changed


  • The Bloomberg Dollar Spot Index rose 0.3%
  • The euro fell 0.7% to $1.0659
  • The British pound fell 0.5% to $1.2423
  • The Japanese yen was little changed at 147.53 per dollar


  • Bitcoin rose 0.6% to $26,380
  • Ether rose 0.9% to $1,619.19


  • The yield on 10-year Treasuries advanced three basis points to 4.27%
  • Germany’s 10-year yield declined five basis points to 2.61%
  • Britain’s 10-year yield declined four basis points to 4.31%


  • West Texas Intermediate crude rose 1.6% to $89.97 a barrel
  • Gold futures fell 0.5% to $1,923.80 an ounce

This story was produced with the assistance of Bloomberg Automation.

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