Dollar Rises as Treasury Yields Hit 3%; Oil Jumps: Markets Wrap: Bloomberg

  • WTI crude rebounds to trade above $71; stocks are mixed
  • Emerging-market jitters continue; euro, pound, yen retreat

The dollar extended gains a fourth day, complicating the picture for emerging markets and commodities as traders digest President Donald Trump’s decision to walk away from a nuclear deal with Iran. Bonds fell before a key Treasury auction, while stocks were mixed as earnings rolled in.

Having erased its 2018 losses earlier this week, the greenback advanced against almost every major peer as the yield on 10-year Treasuries broke above 3 percent. With the euro falling alongside the pound, shares in Europe found some support, and the Stoxx Europe 600 Index edged upward. The MSCI Asia Pacific Index retreated, while U.S. futures climbed. Emerging-market equities were flat and currencies slipped amid the dollar strength and as West Texas crude reversed Tuesday’s slump to climb past $71. Most metals fell.

The threat of an increase in geopolitical tension in the Middle East is weighing on global sentiment just as concern spreads over the implications of higher Treasury yields and a stronger dollar. Wednesday brings with it a $25 billion auction of 10-year U.S. notes, with investors waiting to see if the new bonds will carry a 3 percent coupon for the first time in almost seven years.

Elsewhere, Indonesia’s rupiah fell to a fresh 29-month low on worries about capital outflows from emerging markets. Turkey’s lira whipped from a loss to a gain as President Recep Tayyip Erdogan was said to be calling a meeting with officials to discuss the exchange rate, fueling speculation that authorities may take measures to stem a market rout. Gold slumped.

Terminal users can read more in our markets live blog.

Some key events coming up this week:

  • Malaysia holds a general election Wednesday.
  • Japanese Prime Minister Shinzo Abe hosts South Korean President Moon Jae-in and Chinese Premier Li Keqiang on Wednesday.
  • The Bank of England decides on policy Thursday.
  • U.S. inflation data for April is due the same day.

And these are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index rose 0.2 percent as of 9:36 a.m. London time, to the highest in almost 14 weeks.
  • Futures on the S&P 500 Index jumped 0.3 percent, reaching the highest in almost three weeks on its fifth consecutive advance.
  • The MSCI All-Country World Index decreased less than 0.05 percent.
  • The U.K.’s FTSE 100 Index rose 0.4 percent to the highest in more than 14 weeks.
  • Germany’s DAX Index gained 0.1 percent.
  • The MSCI Emerging Market Index increased less than 0.05 percent to the highest in a week.
  • The MSCI Asia Pacific Index dipped 0.3 percent.

Currencies

  • The Bloomberg Dollar Spot Index increased 0.1 percent to the highest in 19 weeks.
  • The euro declined 0.2 percent to $1.1845, the weakest in 20 weeks.
  • The British pound decreased 0.1 percent to $1.3537.
  • The Japanese yen declined 0.5 percent to 109.68 per dollar, the weakest in a week on the largest drop in two weeks.

Bonds

  • The yield on 10-year Treasuries increased three basis points to 3.01 percent, the highest in two weeks on the biggest climb in almost three weeks.
  • Germany’s 10-year yield climbed two basis points to 0.58 percent, the highest in a week.
  • Britain’s 10-year yield increased two basis points to 1.444 percent, the highest in almost two weeks.

Commodities

  • West Texas Intermediate crude climbed 2.8 percent to $70.99 a barrel, the highest in more than three years on the largest increase in three weeks.
  • Copper decreased 0.2 percent to $3.05 a pound, the lowest in more than a week.
  • Gold fell 0.6 percent to $1,306.30 an ounce, the lowest in a week.

By 

May 9, 2018, 6:38 PM GMT+10

— With assistance by Andreea Papuc

Source: Bloomberg

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