Bonds unsettled by tightening talk, U.S. growth outlook

By Wayne Cole SYDNEY (Reuters) - Global bond markets were under strain on Tuesday amid talk of central bank tightening and the risk of a robust reading on U.S. economic growth later in the week, though stellar results from Alphabet could support tech stocks in Asia.

Reuters July 24, 2018 07:05:06 IST
Bonds unsettled by tightening talk, U.S. growth outlook

Bonds unsettled by tightening talk US growth outlook

By Wayne Cole

SYDNEY (Reuters) - Global bond markets were under strain on Tuesday amid talk of central bank tightening and the risk of a robust reading on U.S. economic growth later in the week, though stellar results from Alphabet could support tech stocks in Asia.

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 billion.

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

In Asia, Japan's Nikkei <.N225> bounced 0.4 percent in early trade as a pullback in the yen eased concerns about earnings pressure on exporters.

Moves elsewhere were marginal with MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> barely changed.

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

Markets were worried that Japanese investors would have less 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 rarely moves more than 1" basis point, she added.

"It reflects a broader fear that central banks are reducing their purchases while U.S. bond supply is set to rise significantly."

As a result, 10-year U.S. Treasury yields jumped to their highest in five weeks around 2.96 percent and were again nearing the psychological 3 percent bulwark.

Part of the move was driven by chatter that data on second-quarter U.S. economic growth (GDP) due on Friday would easily top current forecasts of 4.1 percent.

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 annualised 4.5 percent.

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

Against a basket of currencies, the dollar bounced to 94.619 <.DXY> 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, having run into profit-taking at a peak of $1.1750 overnight.

In commodity markets, oil prices idled as the focus turned to oversupply worries and away from escalating tensions between the U.S. and Iran. [O/R]

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

Spot gold was a fraction firmer at $1,224.46.

(Editing by Shri Navaratnam)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Oil rises 2% as OPEC complies with production cuts
Business

Oil rises 2% as OPEC complies with production cuts

By Jessica Resnick-Ault NEW YORK (Reuters) - Oil prices strengthened on Wednesday, as OPEC and its allies were seen complying with a pact to cut oil supply in September, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases. Early in the day crude was boosted by a bullish stock market. Even as equities whipsawed on pandemic worries, oil stayed higher, buoyed by expectations that OPEC could staunch a supply glut

Tesla's back-to-back price cuts bring sticker on U.S. Model S below $70,000
Business

Tesla's back-to-back price cuts bring sticker on U.S. Model S below $70,000

By Tina Bellon and C Nivedita (Reuters) - Tesla Inc will further cut the price of its Model S "Long Range" sedan in the United States to $69,420, the electric carmaker's chief executive, Elon Musk, announced in a tweet https://bit.ly/2H0JCP0 on Wednesday. The anticipated drop marks the second time this week Tesla has cut the price for the high-end sedan, following a 4% cut of the Model S's price in the United States on Tuesday to $71,990.

Trump cites teenaged son's bout with coronavirus in calling for schools to reopen
World

Trump cites teenaged son's bout with coronavirus in calling for schools to reopen

By Jeff Mason DES MOINES, Iowa (Reuters) - Under siege over his handling of the novel coronavirus pandemic, President Donald Trump on Wednesday cited what he said was his son's mild bout of the virus as a reason why American schools should reopen as soon as possible. Trump made the comment about his son, Barron, as the president swept into Iowa on a mission to shore up support in battleground states that he won in 2016 but is in danger of losing to Democrat Joe Biden barely three weeks before the election. First lady Melania Trump announced in a statement earlier in the day that the virus that struck both her and her husband had also infected their 14-year-old son