A selloff that’s engulfed global bonds continued on Thursday amid speculation that US policymakers will keep policy tight.
(Bloomberg) — A selloff that’s engulfed global bonds continued on Thursday amid speculation that US policymakers will keep policy tight.
The benchmark 10-year yield rose nearly eight basis points to touch 4.69%. Rates on the 30-year briefly rose to a 13-year high. Policy-sensitive tech stocks floundered with the Nasdaq 100 slipping 0.3%.
Treasury yields pulled back from morning highs after Chicago Fed President Austan Goolsbee said policymakers were at risk of overshooting on interest rates by putting too much emphasis on the idea that steep job losses are needed to quell inflation.
Markets wobbled after personal consumption, the main driver of the US economy, rose an annualized 0.8% in the April-to-June period, the weakest advance in over a year. GDP rose at an unrevised 2.1% rate during the period.
“The fact the Treasury market caught a slight bid speaks to the emphasis on the lower revisions to headline inflation and consumption,” said Ian Lyngen, a strategist with BMO Capital Markets. “We remain reluctant to step in front of the selling momentum at this stage; although the realities of an extended government shutdown could quickly redefine the market agenda and shift momentum in favor of lower rates.”
Fed Chair Jerome Powell and a handful of other central bank officials are set to speak later Thursday. Hawkish commentary from central banks has dashed hopes for a pivot toward lower rates any time soon, making September the worst month for global stocks in a year and the weakest for global bonds since February.
Gordon Shannon, portfolio manager at TwentyFour Asset Management, sees investors as coming to accept there will be “less rate cuts and a longer wait until they arrive.”
Peloton Interactive Inc. rose after the maker of the trademark exercise bikes agreed to a deal with Lululemon Athletica Inc. to tap its online workouts and team up on apparel. Micron Technology Inc. tumbled following a mixed outlook for the November quarter.
Key events this week:
- Fed Chair Jerome Powell town hall meeting with educators while Richmond Fed President Tom Barkin speaks Thursday
- Eurozone CPI, Friday
- Japan unemployment, industrial production, retail sales, Tokyo CPI, Friday
- US consumer spending, wholesale inventories, University of Michigan consumer sentiment, Friday
- ECB President Christine Lagarde speaks, Friday
- New York Fed President John Williams speaks, Friday
Some of the main moves in markets:
- The S&P 500 was little changed as of 9:36 a.m. New York time
- The Nasdaq 100 fell 0.3%
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index fell 0.1%
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.4% to $1.0548
- The British pound rose 0.5% to $1.2199
- The Japanese yen rose 0.2% to 149.30 per dollar
- Bitcoin rose 1.1% to $26,516.39
- Ether rose 2% to $1,625.32
- The yield on 10-year Treasuries advanced five basis points to 4.66%
- Germany’s 10-year yield advanced 11 basis points to 2.95%
- Britain’s 10-year yield advanced 17 basis points to 4.53%
- West Texas Intermediate crude fell 1.1% to $92.65 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
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