LONDON (Reuters) – US bond yields deviated from the 14-month highs reached the previous day on Friday, as markets looked like a US economic recovery, while oil stabilized after a 7% drop .
Bond markets moved sharply this week as the US Federal Reserve said it expected higher economic growth and inflation in the United States this year, although it reiterated its promise to keep its target interest rate near zero.
Yields on US 10-year notes, which are reversing the price and rising on growth expectations over the past seven weeks, rose to 1.754% on Thursday to the highest since January 2020. They were last at 1.6838%.
German yields with long dates of government bonds slid simultaneously with U.S. yields.
“Every man and his dog looks at returns on bonds,” said Giles Coghlan, chief currency analyst at HYCM. “Although (Fed Chairman Jerome) Powell was dull, yields of bonds rose higher, simply in the expectation that the Fed was behind the curve – the market price rate increases. ‘
MSCI World shares fell 0.21% from the previous month’s highs by 0.21%, while Nasdaq futures rose 0.8% and S&P 500 futures rose 0.4%.
Oil and US stocks were hit on Thursday by concerns over shaky vaccination and further slowdown in Europe, after France imposed a monthly exclusion in Paris and parts of the north.
French shares fell 0.5%. British stocks fell 0.7% as energy supplies fell.
After falling 7% on Thursday, the Brent futures contract rose 82 cents to $ 64.09 a barrel. U.S. crude rose 88 cents to $ 60.88.
The withdrawal of Oil wiped out four weeks’ gains in a single session amid concerns that world demand would not fall below high expectations.
The rise in treasury yields has given the US dollar some support.
“The majority of market participants consider the Fed’s cautious approach justified and accept that it supports the economic recovery,” Commerzbank analysts said in a note.
“It improves the long-term economic outlook and justifies higher long-term interest rates as well as a stronger dollar.”
The dollar changed little on Friday, but declined 0.1% to 91,735 against a basket of currencies and held steady against the euro at $ 1.1922. It fell 0.2% on the low yield yen to 108.63.
Markets were also uneasy about the decision of the Bank of Japan (BOJ) to broaden the target band slightly for yields for ten years and adjust the purchase of assets.
The bank has portrayed the changes as a ‘lithe’ way to make addiction more sustainable, although investors seem to be taking it as a step back from overall stimulus. A decision to limit purchases to only TOPIX-linked ETFs dropped the Nikkei by 1.6%.
South Korea lost 1%. Chinese blue chips shook off 1.9%, perhaps unnerved by a heated exchange between Chinese and American diplomats during the first personal talks on the Biden era.
The rise in bond yields weighed on gold, offering no fixed return, dropping 0.4% to $ 1,743 ounces.
Additional reporting by Wayne Cole and Elizabeth Dilts Marshall; Edited by Shri Navaratnam, Lincoln Feast, Larry King