Treasuries dip with focus on the Fed; Mixed equities: market envelope


This content was published on June 14, 2021 – 04:21

(Bloomberg) – Treasury yields edged higher on Monday as investors prepared for a key Federal Reserve meeting later in the week. The shares were mixed in thin exchanges.

Ten-year Treasury yields climbed to around 1.46% after hitting their three-month low on Thursday and posting their biggest weekly decline since December last week. Stocks posted modest gains in Japan and South Korea. Trading volumes have been weak with a number of public holidays in the region including Australia, China and Hong Kong. US futures edged higher after stocks staged a late rally on Friday, closing at a new high after a choppy trading day.

The dollar was stable against its Group of 10 peers following a meeting of Group of Seven leaders that emphasized unity.

With Treasury yields trending downward, investors expect the Fed to reaffirm that its ultra-loose policy remains appropriate and that it is too early to even consider cutting bond purchases. Still, officials could forecast interest rates to take off in 2023 amid faster economic growth and inflation, according to economists polled by Bloomberg.

“The FOMC continues to view the surge in inflation as transient and may recognize, even at the margin, that it is discussing the pace of monthly buying but will not yet commit to a date to slow down buying,” said Prudential Financial Inc. Strategist Quincy Krosby in comments emailed.

Elsewhere, Bitcoin surged over the weekend after Elon Musk said Tesla would resume trading with the cryptocurrency when mining is done with cleaner energy. Oil futures rose.

For market commentary, follow the MLIV blog.

Here are some key events to watch out for this week:

  • NATO holds summit on Monday
  • EU-US summit takes place in Brussels on Tuesday
  • Data on US industrial production, producer prices and retail sales arrive Tuesday
  • The Federal Open Market Committee’s rate decision comes on Wednesday, with a press conference by Jerome Powell after
  • US President Joe Biden and Russian Vladimir Putin meet in Geneva on Wednesday
  • U.S. Treasury Secretary Janet Yellen testifies to a House panel on the federal budget Thursday
  • Tariff decisions come from Switzerland and Norway on Thursday
  • Bank of Japan’s monetary policy decision is Friday

Here are some of the main movements in the markets:

Actions

  • S&P 500 futures rose 0.1% at 1:00 p.m. in Tokyo. The benchmark index climbed 0.2% to a record high on Friday.
  • Japan’s Topix index gained 0.3%.
  • South Korea’s Kospi index rose 0.1%.

Currencies

  • The Bloomberg Dollar Spot Index was stable.
  • The euro slipped 0.1% to $ 1.2099.
  • The British pound was stable at $ 1.4110.
  • The Japanese yen gained 0.1% to 109.77 per dollar.

Obligations

  • The yield on 10-year Treasuries rose about one basis point to 1.46%.

Merchandise

  • West Texas Intermediate crude rose 0.4% to $ 71.20 a barrel.
  • Gold fell 0.8% to $ 1,863.02 an ounce.

© 2021 Bloomberg LP


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