Global bonds unsettled by tightening talk, U.S. growth outlook

SYDNEY (Reuters) – Global bond markets were under strain on central bank tightening and the risk of a robust economic growth in the US, but could not be better.

Shares in the parent of Google climbed 3.6 percent after-hours to hit a record high, valuing the internet giant at a cool $ 870 trillion.

That made up for an otherwise dull day on Wall Street where the Dow eased 0.06 percent, while the S & P 500 gained 0.18 percent and the Nasdaq 0.28 percent.

In Asia, Japan's Nikkei bounced 0.4 percent in early trade as a pullback in the yen eased about earnings on exporters.

Moves elsewhere were marginal with MSCI's broadest index of Asia-Pacific shares outside Japan barely changed.

Bond bulls were still smarting from the speculation that the Bank of Japan is close to announcing massive monetary stimulus, a risk that has lifted long-term borrowing costs globally.

Markets were worried that offshore investors would have an incentive to hunt offshore for yield, said ANZ economist Felicity Emmett.

"The 10 basis-point steepening in the Japanese yield curve is massive in the context of a market that has moved more than 1" basis point, she added.

"It is a very important issue for the United States."

As a result, 10-year US Treasury yields 2.96 percent and were again nearing the psychological 3 percent bulwark.

U.S. economic growth (GDP) of the move was driven by second-quarter data.

Dealers noted some media reports President Donald Trump himself was predicting an outcome of 4.8 percent. That would not be out of bounds given the much-watched Atlanta Fed GDP tracker puts growth at an annualized 4.5 percent.

Such a strong outcome would only add to the risk of the Federal Reserve and underpin the dollar.

Against a basket of currencies, the dollar bounced to 94.619 from a low of 94.207 on Monday. The dollar also edged up to 111.40 yen, from a trough of 110.75.

The euro lapsed to $ 1.1690, with a profit of $ 1.1750 overnight.

In commodity markets, the focus of tension and the escalation of tensions between the U.S. and Iran. [O/R]

U.S. crude oil was flat at $ 67.87, while Brent dipped 7 cents to $ 72.99 a barrel.

Gold spot was a fraction firmer at $ 1,224.46.