Dollar pares advance as Treasury yields edge up; WTI oil gains
Pound rises before Brexit bill test; EM currencies drop
The meeting between President Donald Trump and Kim Jong Un was met with a collective shrug by global markets, which appear to be more fixated on a host of macro events and data coming in the next few days. Stocks were little changed, Treasuries nudged down, and commodities were mixed.
The Stoxx Europe 600 Index opened higher, but pared its advance after modest gains for many Asian gauges failed to ignite the MSCI Asia Pacific Index. S&P 500 futures were flat after the underlying gauge posted a small increase on Monday. Safe-haven assets including the yen and gold slipped as Trump and Kim signed a document pledging to work toward peace on the Korean peninsula. The pound reversed a decline before Theresa May’s landmark Brexit legislation goes to Parliament, as data showed a surprise moderation in the pace of wage growth.
There was never much prospect of the U.S.-North Korea summit triggering a large market reaction, except perhaps in the event of a shock outcome. A seemingly certain Federal Reserve rate increase on Wednesday, plus the prospect of a hawkish European Central Bank tilt on Thursday, tease far more concrete developments for traders. Tuesday’s inflation figures out of the U.S. may even reignite the four-hikes-in-2018 debate ahead of the Fed’s decision.
“Despite the historic event, the markets haven’t moved much because they’ve already discounted the risk of military conflict,” Goohoon Kwon, co-head of Korea research and senior Asia economist at Goldman Sachs Group Inc. told Bloomberg Television. What’s more important going forward is the “follow-through, execution, implementation” of any agreements, he said.
Elsewhere, West Texas oil held gains above $66 a barrel as a divide between OPEC deepened over whether to ease production. The Turkish lira led a drop in emerging-market currencies ahead of the possible U.S. rate increase, which could suck more cash from developing nations.
Terminal users can read more in Bloomberg’s Markets Live blog.
These are some key events to watch this week:
- U.K. Prime Minister Theresa May faces votes that could derail her Brexit policy on Tuesday.
- The Federal Reserve is expected to raise interest rates Wednesday as the U.S. economy remains solid.
- The European Central Bank rates decision comes Thursday with a briefing from President Mario Draghi.
- The Bank of Japan June monetary policy decision and news conference is Friday.
- FIFA expects more than 3 billion viewers for the World Cup that begins this week in Russia.
And these are the main moves in markets:
- The Stoxx Europe 600 Index decreased less than 0.05 percent as of 9:30 a.m. London time.
- Futures on the S&P 500 Index declined less than 0.05 percent.
- The U.K.’s FTSE 100 Index fell 0.2 percent.
- Germany’s DAX Index dipped less than 0.05 percent.
- The MSCI Emerging Market Index rose less than 0.05 percent.
- The MSCI Asia Pacific Index jumped 0.1 percent.
- The Bloomberg Dollar Spot Index increased less than 0.05 percent to the highest in a week.
- The euro gained 0.1 percent to $1.1796.
- The British pound rose 0.1 percent to $1.3395.
- The Japanese yen decreased 0.2 percent to 110.25 per dollar, the weakest in three weeks.
- The Turkish lira sank 0.3 percent to 4.5363 per dollar.
- The yield on 10-year Treasuries gained one basis point to 2.96 percent.
- Germany’s 10-year yield rose two basis points to 0.51 percent, the highest in three weeks.
- Britain’s 10-year yield climbed two basis points to 1.427 percent, the highest in almost three weeks.
- Italy’s 10-year yield increased less than one basis point to 2.843 percent.
- West Texas Intermediate crude gained 0.4 percent to $66.35 a barrel, the highest in more than a week.
- Gold fell 0.2 percent to $1,297.60 an ounce, the largest fall in more than a week.
- Brent crude rose 0.5 percent to $76.82 a barrel.
By Samuel Potter – June 12, 2018, 6:35 PM GMT+10
— With assistance by Sarah Ponczek, Janine Wolf, Andreea Papuc, and Charlotte Ryan