Interest rate, oil price surges curb stocks on Wall Street

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Market fears. So the yield on the 10-year Treasury indicates that growth may be solid this year and inflation could move higher - but presumably will not get out of control.

It also suffers from rising yields in its own right, as these lift the opportunity cost of holding non-interest bearing assets like bullion. Estimates for March showed Consumer Price Inflation standing at 2.4 per cent compared with a year earlier, but the Consumer Price Index fell for the first time since May 2017.

In addition, the 10-year yield is an important part of the yield curve; when the yield curve inverts from its normal slope, because rates on the longer end are lower than rates on the shorter end, it is viewed as a signal that recession may be coming. Stocks are no longer the only game in town. Oil prices initially fell more than 1% after the announcement, but have since recovered those losses to be up slightly on the day, an impressive performance in the context of the appreciation in the Dollars. In the bond market, the Treasury will auction 2-year notes on Tuesday, 2-year FRNs and 5-year notes on Wednesday, and 7-year notes on Thursday.

US gold futures fell 0.6 percent to $1,329.80 per ounce. The last time 10-year Treasuries traded near similar levels was back in April 2011.

"Based on interest rates, prices should be lower", Gambarini said.

Global equities slipped on Monday as USA bond yields approached the 3 percent level that has triggered market spasms in the past and investors awaited earnings results from some of the world's biggest firms.

"Investors and analysts have pointed to signs of inflation as one factor behind the yield's gains, particularly rising prices for commodities, including oil, and trade tensions with China", writes Daniel Kruger in the Wall Street Journal".

The shift is welcome news for investors wagering on a dollar rebound.

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In the day ahead, Australian CPI is released, with the market expecting the RBA's measures of core inflation to be a little below 2%, the bottom of the RBA's target range. However, the outlook for European Union stocks remain positive and they could extend their gains further.

North Korean leader Kim Jong Un is due to hold a summit with South Korean President Moon Jae-In on Friday, and is expected to meet with US President Donald Trump in late May or early June.

"The equity markets slid sharply in January and March in response to the rise in Treasury yields".

The rise in bond yields also weakened Asian emerging market currencies versus the dollar, with the Chinese yuan and Korean won down and the Indonesian rupiah hitting a two-year low of 13,895 per dollar.

Traders work on the floor of the New York Stock Exchange.

Taxable bond mutual funds and ETFs have drawn $68 billion in net inflows this year, bringing the total in those funds to $4.9 trillion, according to Lipper.

"The narrowing gap between the two yields reflects investors' confidence that the Fed will maintain its current pace of interest rate increases despite continuing skepticism that growth will break out of its postcrisis torpor".

"I've been of the opinion that closing above 3 [percent] would lead to an acceleration to higher yields", said Gundlach.

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