LONDON (Reuters) – US bond yields fell to a 14-month high on Friday, as markets looked to a US economic recovery as oil stabilized after a 7% drop.
Bond markets faced strong moves this week as the US Federal Reserve said it expected higher economic growth and inflation in the United States this year, although it reiterated its commitment to maintain the rate. interest rate close to zero.
Yields on 10-year US banknotes, which are reversing in price and have risen in the last seven weeks in terms of growth expectations, rose to their highest level since January 2020, at 1.754% on Thursday. They were last at 1.6838%.
Old government bond yields in Germany have fallen in tandem with US yields.
“Every man and his dog looks at bond yields,” said Giles Coghlan, chief currency analyst at HYCM. “Even though (Fed Chairman Jerome) Powell was black, bond yields went higher, simply waiting for the Fed to be behind the curve – the market estimates rates are rising.”
MSCI global stocks fell 0.21% from a month high of the previous session, although Nasdaq futures rose 0.8% and S&P 500 futures gained 0.4%.
Oil and US stocks were affected on Thursday by concerns about hesitant vaccine launches and future slowdowns in Europe, after France imposed a one-month blockade on Paris and parts of the north.
French shares fell 0.5%. UK stocks fell 0.7%, while energy stocks fell.
After falling 7 percent on Thursday, Brent crude futures jumped 82 cents to $ 64.09 a barrel. American crude rose 88 cents to $ 60.88. [O/R]
The oil withdrawal wiped out four weeks of gains in a single session amid concerns that global demand will not live up to high expectations.
The jump in Treasury yields provided some support for the US dollar.
“Most market participants believe that the Fed’s prudent approach is justified and assume that this supports the economic recovery,” Commerzbank analysts said in a note.
“It improves the long-term economic outlook and therefore justifies higher long-term interest rates as well as a stronger dollar.”
The dollar changed slightly on Friday, but fell 0.1% to 91.735 against a basket of currencies and remained steady against the euro at $ 1.1922. It fell 0.2% against the low-yielding yen to 108.63.
Markets were also alarmed by the Bank of Japan’s (BOJ) decision to slightly widen the target band for 10-year returns and improve its asset purchases.
The bank described the changes as an “agile” way to make relaxation more sustainable, although investors seemed to do so as a step back from full stimulation. A decision to limit purchases only to TOPIX-related ETFs led Nikkei to 1.6%.
South Korea lost 1%. Chinese chips lost 1.9%, probably disturbed by an exchange of fire between Chinese diplomats and the US in the first in-person talks in the Biden era.
The rise in bond yields weighed on gold, which does not offer a fixed return, and left it down 0.4% to $ 1,743 an ounce.
Additional reports by Wayne Cole and Elizabeth Dilts Marshall; edited by Shri Navaratnam, Lincoln Feast, Larry King