A selloff in government bonds accelerated Monday as the threat of further rate hikes unsettled traders.
(Bloomberg) — A selloff in government bonds accelerated Monday as the threat of further rate hikes unsettled traders.
The yield on 30-year German bonds rose nine basis points to 2.72%, the highest since early 2014. Similar-maturity Treasury yields jumped seven basis points. US equity futures rose modestly, signaling a rebound from Friday’s retreat.
Federal Reserve Governor Michelle Bowman said over the weekend that the US central bank may need to raise rates further in order to fully restore price stability. Investors also considered mixed signals from Friday’s US jobs, which showed wages above forecast even as payrolls growth moderated.
“We don’t think central banks will get the rise in unemployment rate and sustained moderation in wage growth in the coming year that they hope to see,” ADA Economics Ltd. Chief Economist Raffaella Tenconi said in an interview with Bloomberg TV.
After Earnings, Markets Are Back to Watching Rates: Taking Stock
Trading in stocks was more subdued. European stocks retreated as a index of German industrial output fell to a six-month low, underscoring weakness in the economy. Volumes in Europe were also relatively light, with trading of Euro Stoxx 50 stocks about 40% less than the 30-day average.
The key data point for the week will be US consumer price index reading on Thursday, which is expected to show moderate price growth. The index is projected to rise 0.2% in July for a second month after excluding food and energy costs, marking the smallest back-to-back gains in 2 1/2 years.
Key events this week:
- Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman at Fed Listens event, Monday
- Japan household spending, Tuesday
- US wholesale inventories, trade, Tuesday
- Philadelphia Fed President Patrick Harker speaks, Tuesday
- China CPI, PPI, Wednesday
- India rate decision, Thursday
- US initial jobless claims, CPI, Thursday
- Atlanta Fed President Raphael Bostic pre-recorded remarks for employment webinar, Thursday
- UK industrial production, GDP, Friday
- US University of Michigan consumer sentiment, PPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 7:10 a.m. New York time
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 fell 0.4%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.3% to $1.0975
- The British pound fell 0.1% to $1.2730
- The Japanese yen fell 0.4% to 142.38 per dollar
Cryptocurrencies
- Bitcoin was little changed at $29,073.92
- Ether rose 0.2% to $1,833.55
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 4.10%
- Germany’s 10-year yield advanced five basis points to 2.61%
- Britain’s 10-year yield advanced seven basis points to 4.45%
Commodities
- West Texas Intermediate crude fell 1% to $82 a barrel
- Gold futures fell 0.3% to $1,969.80 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Ishika Mookerjee, Tassia Sipahutar, Alex Nicholson and Sagarika Jaisinghani.
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