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(Bloomberg) – US treasury bills fell along with government bonds and European equities as investors reduced bets on Fed easing before President Jerome Powell testified. Crude oil has won.
The 10-year Treasury yield exceeded 2.1% for the first time in a month. Good data from the manufacturing industry in France also weighed on the main European bonds, as German Bund yields rose partly due to weak demand at an auction. The futures on the S & P 500 index have indicated a lower opening in New York and the Stoxx Europe 600 gauge is headed towards a fourth day of decline. The Asian trading session was mixed, with modest gains in Hong Kong and South Korea and declines in Japan and China. The dollar remained stable and the pound strengthened for the first time in four days, while data indicated that the British economy had rebounded in May.
Powell's two-day bi-annual conference at the Economic and Political Outlook Congress will set expectations for the Fed's policy meeting at the end of July. As equities and bonds have had huge gains since the beginning of the year, it is unclear what impetus they can obtain given that traders are already expecting a cycle of interest rate cuts. Investors will also consult the minutes of the June meeting today to detect any sign of possible withdrawal from the Fed on policy easing.
"There is a very real risk that the Fed will maintain a neutral stance as members are sharply divided on the need for political accommodation," said Nema Ramkhelawan-Bhana, an economist at FirstRand Bank Ltd. "If Powell adopted a similar strategy, it would immediately dissipate the risk fabric created by global markets over the past month."
At the same time, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke on the phone with their Chinese counterparts, marking the first high-level contact after their presidents agreed to resume the talks. trade negotiations last month.
Elsewhere, the West Texas Intermediate Crude recorded the strongest advance in a week, an industry report indicating a continued reduction in US crude inventories has had the effect of tightening the outlook for supply threatened by rising tensions in the Middle East. The Mexican peso has stabilized after slipping on the announcement of the resignation of the country's finance minister.
Here are some key events to come:
Powell testifies before the Congress on Monetary Policy and the State of the US Economy Wednesday (House of Representatives) and Thursday (Senate). The minutes of the written meeting are expected Wednesday, the minutes of the ECB Thursday. A key measure of US inflation – the base consumer price index, expected on Thursday, is expected to have risen 0.2% in June from the previous month, while the CPI widened should remain unchanged. US producer prices are due on Friday.
Here are the main movements on the markets:
stocks
The S & P 500 Index futures fell 0.3% at 6:21 am New York time. The Stoxx Europe 600 index fell 0.2%, its lowest level in more than a week. UK FTSE 100 plunged 0.2% The German DAX fell 0.5%, its lowest level in almost two weeks. The MSCI Asia-Pacific Index rose 0.1%. The MSCI Emerging Market Index jumped 0.4%.
Coins
The Bloomberg Dollar Spot Index decreased by 0.1%. The euro rose 0.1% to $ 1.1221, the biggest rise in more than two weeks. Sterling rose 0.1% to 1.2477 dollars. The Japanese yen fell less than 0.05% to 108.88 per dollar.
Obligations
The yield on 10-year Treasuries rose four basis points to a two-week high of 2.10%. Germany's 10-year yield jumped six basis points, to -0.29% thanks to the largest gain in 13 months. Britain's 10-year yield rose six-point at 0.783% at the highest for more than a week.
Basic products
Gold fell 0.1% to $ 1,395.76 an ounce. West Texas Intermediate crude rose 2.1% to $ 59.06 per barrel, its highest level in more than a week. Iron ore dipped 2.3% to 114.01%. dollars a ton.
–With the help of Adam Haigh.
To contact the reporter about this story: Laura Curtis in London at [email protected]
To contact the editors responsible for this story: Samuel Potter at [email protected], Robert Brand
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