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Italian bonds steady; emerging-markets in focus as lira falls
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Sterling gains then pares on conflicting customs union reports
Ten-year U.S. Treasury yields extended their advance on Thursday, rising through 3.1 percent as global markets continued to adjust to an upbeat outlook for the world’s largest economy. The pound rose, but pared its gains amid conflicting reports over Britain’s future in the EU customs union.
Most European bonds tracked the Treasury move, which follows strong retailer results and solid economic data on Tuesday that has boosted confidence in American growth. Gilts followed the declines and sterling erased more than half of its advance amid reported denials of a Telegraph story claiming the U.K. is prepared to stay in the customs union beyond 2021.
Italian bonds fluctuated after plunging on Tuesday. The Stoxx Europe 600 Index drifted higher, while equities rose in Japan and fell in Australia and Korea. West Texas oil extended gains toward $72 a barrel. The dollar was steady.
Signs that the world’s largest economy will continue to pick up steam offer some consolation to investors, who are having to adjust to the highest U.S. bond yields in years and trying to second-guess issues stretching from peace on the Korean peninsula to Italian populists forming a government. Looming over it all are trade talks between the U.S. and China, the outcome of which could cement the global growth story — or derail it.
Elsewhere, the Australian dollar ticked higher after employment rose more than forecast. The Turkish lira deepened its losses, while emerging-market stocks slipped.
Terminal users can read more in our markets live blog.
These are some key events to watch this week:
- U.S. jobless claims are due Thursday.
- Cleveland Fed President Loretta Mester speaks on monetary policy at an ECB conference in Frankfurt on Thursday.
- Chinese Vice Premier Liu He is expected in Washington for more trade talks.
And these are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index increased less than 0.05 percent as of 9:57 a.m. London time.
- Futures on the S&P 500 Index sank 0.2 percent.
- The U.K.’s FTSE 100 Index declined less than 0.05 percent.
- Germany’s DAX Index rose 0.1 percent to the highest in a week.
- The MSCI Emerging Market Index sank 0.3 percent.
- The MSCI Asia Pacific Index decreased 0.1 percent to the lowest in a week.
Currencies
- The Bloomberg Dollar Spot Index fell 0.1 percent, the largest fall in a week.
- The euro increased less than 0.05 percent to $1.1812.
- The British pound rose 0.3 percent to $1.3526, the largest rise in a month.
- The Japanese yen fell 0.3 percent to 110.70 per dollar, the weakest in more than 16 weeks.
- The Turkish lira sank 0.7 percent to 4.4474 per dollar, the weakest on record.
Bonds
- The yield on 10-year Treasuries gained one basis point to 3.11 percent, reaching the highest in about seven years on its fifth straight advance.
- Germany’s 10-year yield rose three basis points to 0.63 percent.
- Britain’s 10-year yield climbed five basis points to 1.503 percent, the highest in more than 11 weeks.
- Italy’s 10-year yield dipped less than one basis point to 2.112 percent.
Commodities
- West Texas Intermediate crude gained 0.4 percent to $71.78 a barrel, the highest in more than three years.
- Gold dipped 0.2 percent to $1,288.04 an ounce, the weakest in 20 weeks.
- Brent crude rose 0.4 percent to $79.61 a barrel, the highest in more than three years.
May 17, 2018, 6:59 PM GMT+10
— With assistance by Jeremy Herron, and Andreea Papuc
Source: Bloomberg