Treasuries extend Powell slide; Hybrid stocks: wrapping the markets

Treasuries extend Powell slide;  Hybrid stocks: wrapping the markets

(Bloomberg) — Treasuries extended the selloff Friday after Federal Reserve Chairman Jerome Powell said policymakers will likely wait until after March before cutting interest rates. Chinese stocks witnessed more violent fluctuations after official support signals.

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US 10-year bond yields rose six basis points after jumping 14 basis points on Friday after stronger-than-expected payroll data. “The danger of acting too early is that the mission is not yet complete,” Powell said in an interview with CBS's 60 Minutes program that was broadcast on Sunday in the United States.

The declines in Treasuries sent ripples through bond markets, dragging down government debt from Australia to Germany. The dollar rose against most of its major counterparts. European stocks rose, while US stock futures fell.

Traders trimmed their bets on a Federal Reserve rate cut in March after surprisingly strong jobs data on Friday sparked concern that there may be more work to do to get inflation under control. Although US officials have cemented the end of the aggressive tightening campaign, Powell's comments on Sunday highlighted how policymakers are resisting still-high market bets on cuts.

Federal Reserve Chairman Jerome Powell arrives to speak during a press conference on Federal Reserve monetary policy at the Federal Reserve Board, Wednesday, January 1.  November 31, 2024, in Washington.  (AP Photo/Alex Brandon)

Federal Reserve Chairman Jerome Powell. (AP Photo/Alex Brandon) (News agency)

The focus will be on earnings in the European trading session, with UniCredit SpA up 7% after reporting profits. Vodafone Group Plc shares fell, even after the company reported higher-than-expected sales.

In Asia, Chinese stocks witnessed another volatile session as investors took stock of recent pledges by policymakers to stabilize a declining stock market. The benchmark CSI 300 index oscillated between losses of 2.1% and gains of 1.7%.

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“It is not yet clear whether or not today will mark the bottom for Chinese stocks, but it certainly feels as if we are hitting the bottom as policymakers have signaled they no longer want to see further declines,” said strategist David Zhao. At Invesco Asset Management in Singapore.

Former US President Donald Trump also indicated that he may impose a tariff on Chinese goods of more than 60% if he is elected, in a new round of hard-line rhetoric targeting the largest supplier of goods to the United States.

Oil prices rose as the United States pledged more strikes against Iranian forces and their proxies, while the Houthis promised revenge for bombing over the weekend. Double gold.

Main events this week:

  • Eurozone S&P Global Services PMI, Producer Price Index, Monday

  • Australian interest rate decision, Tuesday

  • Retail sales in the euro zone, Tuesday

  • German factory orders today, Tuesday

  • Cleveland Fed President Loretta Mester and Philadelphia Fed President Patrick Harker spoke Tuesday

  • Bank of England Deputy Governor Sarah Breeden speaks on Wednesday

  • Fed Governor Adriana Kugler and Richmond Fed President Tom Barkin spoke Wednesday

  • China Producer Price Index, Consumer Price Index, Thursday

  • Pakistani general elections, Thursday

  • ECB Chief Economist Philip Lane and ECB Governing Council member Pierre Wunsch spoke on Thursday

  • The European Central Bank publishes its economic bulletin on Thursday

  • Initial unemployment claims in the US, Thursday

  • US Treasury Secretary Janet Yellen speaks at a Senate Banking Committee hearing on Thursday

  • Reserve Bank of Australia Governor Michael Bullock testifies before Parliament on Friday

  • China total financing, money supply, new yuan loans, Friday

  • German Consumer Price Index, Friday

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Some key movements in the markets:

Stores

  • The Stoxx Europe 600 rose 0.3%, more than any closing gain since January. 26 at 8:14 am London time

  • S&P 500 futures fell 0.1%

  • Nasdaq 100 futures fell 0.1%

  • Dow Jones Industrial Average futures fell 0.3%.

  • There was little change in the MSCI Asian stock index

  • The MSCI Emerging Markets Index fell by 0.2%.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1% to the highest level since December. 11

  • There was little change in the euro at $1.0784

  • There was little change in the Japanese yen at 148.42 to the dollar

  • There was little change in the yuan in external transactions at 7.2157 to the dollar

  • There was little change in the pound sterling at $1.2627

Digital currencies

  • Bitcoin rose 0.7% to $43,053.36

  • Ethereum rose 0.6% to $2,313.84

Bonds

  • The yield on 10-year Treasury bonds rose 6 basis points to 4.08%.

  • The yield on 10-year German bonds rose four basis points to 2.28%.

  • The yield on British 10-year bonds rose four basis points to 3.96%.

Goods

  • Brent crude rose 0.3 percent to $77.56 a barrel

  • Gold in spot transactions fell 0.7 percent to $2,025.10 per ounce

This story was produced with assistance from Bloomberg Automation.

-With assistance from Richard Henderson and Ishika Mukherjee.

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