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Bloomberg dollar index rises for fourth day on higher yields
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Treasury auction gives some of the highest rates in a decade
European stocks retreated on Wednesday, shrugging off gains in the Asia session as traders brace for a busy second half of the week. The region’s bonds advanced, Treasuries were flat and the dollar extended gains before another round of U.S. debt sales and the release of minutes from the latest Fed meeting.
Almost every sector of the Stoxx Europe 600 Index fell, with the gauge tracking losses in the U.S. on Tuesday rather than the more positive mood in Asia. Stocks rose in Hong Kong, cementing a rebound from one of the worst sell-offs in years at the start of the month. S&P 500 Index futures edged lower. Benchmark Treasury yields steadied, but remain near recent highs as the U.S. government continues its a big week for debt auctions.
The Treasury’s $258 billion of auctions slated for this week comes amid surging rates that gave impetus to one of the steepest equity sell-offs in years two weeks ago. While investors seem to have adjusted to 10-year rates at a four-year high for now, the deluge of supply could push yields higher, weakening the case for owning stocks at elevated valuations.
Investor attention will also be on minutes from the Fed’s most recent meeting, due Wednesday in New York. On Thursday they will also get to parse minutes from the most recent meeting of the European Central Bank.
Elsewhere, oil in New York dropped toward $61 a barrel ahead of U.S. government data that’s forecast to show crude inventories gained for a fourth week. Bitcoin slipped, but pared its decline to hover above $11,000.
Terminal users can read more in our markets blog.
Here are some key events scheduled for this week:
- The Federal Reserve will release minutes on Wednesday of its Jan. 30-31 meeting, Janet Yellen’s last as chair, where officials kept the rate unchanged.
- Fed policy makers speaking this week include New York Fed President William Dudley and Atlanta Fed President Raphael Bostic. Cleveland Fed President Loretta Mester is among speakers at the U.S. Monetary Policy Forum in New York City.
- Companies announcing earnings this week include Woolworths, Barclays and Royal Bank of Scotland.
- Shanghai’s market reopens on Thursday after holidays.
These are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index declined 0.3 percent as of 8:23 a.m. London time.
- Futures on the S&P 500 Index fell 0.1 percent to the lowest in a week.
- The MSCI Asia Pacific Index increased 0.3 percent.
- The U.K.’s FTSE 100 Index decreased 0.2 percent to the lowest in a week.
- The MSCI Emerging Market Index jumped 1 percent to the highest in more than two weeks.
Currencies
- The Bloomberg Dollar Spot Index increased 0.1 percent to the highest in more than a week.
- The euro decreased 0.1 percent to $1.2323, the weakest in more than a week.
- The British pound declined 0.2 percent to $1.3972, the weakest in more than a week.
- The Japanese yen declined 0.3 percent to 107.66 per dollar, the weakest in more than a week.
- South Africa’s rand jumped 0.2 percent to 11.7067 per dollar.
- The MSCI Emerging Markets Currency Index advanced less than 0.05 percent.
Bonds
- The yield on 10-year Treasuries decreased less than one basis point to 2.89 percent.
- Germany’s 10-year yield decreased three basis points to 0.71 percent.
- Britain’s 10-year yield dipped three basis points to 1.559 percent, the lowest in two weeks.
Commodities
- West Texas Intermediate crude decreased 1.1 percent to $61.13 a barrel, hitting the lowest in a week with the first retreat in more than a week.
- Gold fell 0.1 percent to $1,327.88 an ounce, the weakest in more than a week.
By Andreea Papuc and Samuel Potter
February 21, 2018, 7:30 PM GMT+11
— With assistance by Jeremy Herron, and Sophie Caronello
Source: Bloomberg