US stocks ended the week on a high and global bond markets weakened on Friday, with investors battling a lukewarm Treasury auction result and data showing a race for money after weeks of volatile trading.
At the close of the market, the blue-chip S&P 500 index had risen to 1.7 percent, while the technology-focused Nasdaq Composite ended at 1.2 percent to reverse post-lunch losses.
Yields on the US 10-year note gained 0.04 percentage points to 1.67%, the highest mark since Monday, with investors selling the debt. The upward movement in yields began on Thursday night after the U.S. Treasury Department struggled to sell $ 62 billion in seven-year bonds.
“The weak seven-year auction is a timely reminder that the scenario points to higher rates,” said ING analysts.
Investors are concerned about the risk of inflation that comes from holding government bonds, as President Joe Biden’s vast stimulus plan raises expectations that the US economy will heat up.
Blake Gwinn, head of US tax strategy at NatWest Markets, said the auction “was not a good sign for demand”, but compared to the “disaster” of the previous seven-year auction in February, which rekindled health fears In the US government bond market, $ 21 trillion, was a kind of “relief” for investors.
Ian Lyngen, head of US tax strategy at BMO Capital Markets, characterized the demand as “uninspired, but not horrible”, adding that the sale “provided little definitive evidence of any sponsorship for Treasury bills or an undisputed vote of confidence. ”.
Traders invested $ 45.6 billion in cash funds in the week through Wednesday, the biggest flow since April last year, according to Bank of America research based on EPFR data. The report also showed $ 1.8 billion flowing into Inflation-Protected Treasury Bonds, the third largest influx on record, as investors continued to position themselves for further US price growth.
European government bonds weakened, with 10-year bond yields from Germany and the UK rising by about 0.03 percentage points.
In other parts of the continent, stocks have increased. Stoxx Europe 600 across the region closed up 0.9 percent and the UK’s FTSE 100 was 1 percent higher.
“I think what’s interesting in Europe is the contrast between the stock markets and health problems,” said Sebastian Mackay, manager of multi-asset funds at Invesco, adding that recent economic data suggested that Europe’s economies continued to grow despite the faltering launch of Covid-19 vaccines.
“We are probably on a cyclical rise for stocks,” said Mackay. “The rise has been fueled by the prospect of a reopening of the global economy, but the valuations are already quite stretched.”
The oil markets remained unstable as efforts to unblock the Suez Canal and restore global trade routes continued to face difficulties.
Paola Rodríguez-Masiu, a senior oil market analyst at Rystad Energy, said traders felt the channel blockade was “becoming more significant for oil flows and supply deliveries than they previously concluded”.
Brent oil, the international benchmark, rose 4.2 percent to $ 64.49 a barrel, while West Texas Intermediate, the American market, rose by a similar margin to $ 60.99 a barrel.