(Bloomberg) – Sovereign bonds rebounded, U.S. stock futures rose and the dollar fell on Monday, signaling calmer markets after the turmoil caused by the fall in government debt last week.
Treasury yields stabilized and Australian and New Zealand debt increased. Australia’s 10-year sovereign yield fell further in a year, after the central bank doubled purchases in its regular bond-buying operation, in a new attempt to pacify fixed-income markets.
The bond recovery helped the S&P 500 and Nasdaq 100 move forward, while stocks in Japan, Australia and Hong Kong soared. On Friday, the S&P 500 fell and technology stocks rebounded modestly, with a recovery in Treasury bonds taking the 10-year yield back to 1.40%.
Most of the Group of 10 currencies rose, with Australian and New Zealand dollars among the best performing, despite data showing that China’s economic recovery slowed in February. Commodities soared when oil exceeded $ 62 a barrel.
“With a big change in yields due to improved growth prospects and prospects for reopening, risk appetite is holding back,” said Esty Dwek, head of global strategy at Natixis Investment Manager Solutions. “The pace and scale of the yield movement is more important than the absolute level, suggesting that as long as the movement is gradual, risky assets must be able to absorb it.”
Global bonds stabilized after last week’s sharp losses, after central banks from Asia to Europe provided assurances that policy support remains in place. This helped to pull Treasury yields from their highest level in a year and set a floor for equities. Investors were nervous about the prospect of faster inflation leading to tighter policy, with traders increasing their position so that the Federal Reserve will start raising interest rates as early as next year.
“The market is testing the Fed and global central banks for their seriousness here,” said Al Lord, CEO of Lexerd Capital Management, to Bloomberg TV. “There are expectations of growth and growing concerns about inflation, and this is happening in the markets.”
Over the weekend, the US House of Representatives approved President Joe Biden’s $ 1.9 trillion Covid-19 aid package. The bill goes to the Senate, where Biden will need to win Republican support or avoid losing a single Democratic vote.
There are some important events to watch this week:
Caixin China’s manufacturing PMI expires on Monday. The Federal Bank of Australia sets monetary policy on Tuesday. The US Federal Reserve Beige Book expires on Wednesday. OPEC + meeting in production on Thursday. The US employment report for February on Friday will provide an update on the speed and direction of the country’s labor market recovery. Beijing is expected to reveal its main economic objectives on March 5, when the National People’s Congress will meet for its annual meeting.
These are some of the main movements of the markets:
Stocks
S&P 500 futures were up 0.8% as of 10:26 am in Tokyo. The S&P 500 index fell 0.5%. Japan’s Topix index gained 1.7%. Australia’s S & P / ASX 200 index rose 1.5%. The Hang Seng index rose 1.7%.
Coins
The yen was trading at 106.57 per dollar. The offshore yuan was 6.4739 per dollar, up 0.1%. The Bloomberg Dollar Spot index fell 0.3%. The euro was at $ 1.2093, up 0.2%. The Australian dollar rose 0.8% to 77.65 cents. .
Titles
Australia’s 10-year yield fell 27 basis points to 1.65%. The yield on 10-year Treasury bonds was stable at 1.41%.
Commodities
West Texas Intermediate crude rose 2.2% to $ 62.83 a barrel. Gold was up 0.6% to $ 1,743.60 an ounce.
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