Fears of falling bond prices gripping the market sank on Monday as European equities and US futures rose as bond yields fell.
The increase in bond yields plunged the stock markets last week, with the technology-heavy Nasdaq Composite COMP,
lost almost 5%. Rising returns make the relative valuation of equities worse. Yields move in the opposite direction of prices.
The yield on the US Treasury TMUBMUSD10Y for ten years,
was 1.43%, lower than 1.55% last week.
The Reserve Bank of Australia doubled its daily bond purchases to A $ 4 billion, yielding returns on the Aussie ten-year TMBMKAU-10Y,
sharp bearing. Comments from Federal Reserve officials last week had no appetite for intensifying purchases of U.S. government bonds.
‘There is little doubt in my mind that central banks will eventually lean fairly hard against a sustained rise in yields. They simply can not afford to see this happen with such a high level of debt, “said Jim Reid, a strategist at Deutsche Bank. ‘So far, Fed officials have been largely relaxed about the recent moves, indicating that it reflects more positive economic growth. But since it all happened so fast last week, they would have had the chance to regroup and adjust their message for this week. “
The easing on the price front boosted equities with the Stoxx Europe 600 SXXP,
gained 1.6% after a rise in Asian equities NIK,
overnight.
Futures on the Dow Jones Industrial Average YM00,
rose more than 300 points.
British homeowners have jumped and according to reports, the government will subsidize mortgage loans with 5% payments, which are meant to encourage homeownership in a country with the average home price of £ 251,500, and £ 496,066 in London. Persimmon PSN,
increased by 6% and Taylor Wimpey TW,
5% added.
British Chancellor Rishi Sunak will present the budget on Wednesday.