Fears that monetary policymakers in the U. S. and Japan will scale back support for the economy sent quivers through debt markets on Monday, while U. S. stocks gained ahead of major company earnings reports.
NEW YORK (Reuters) – Fears that monetary policymakers in the U. S. and Japan will scale back support for the economy sent quivers through debt markets on Monday, while U. S. stocks gained ahead of major company earnings reports.
Bond yields climbed as the Federal Reserve was seen as likely to continue raising interest rates despite criticism from U. S. President Donald Trump and after a Reuters report that the Bank of Japan (BoJ) was discussing modifying its huge stimulus program sent Japan’s 10-year bond yield to a six-month high.
The report rekindled anxieties about how much monetary policymakers will continue supporting economies around the world and piled further pressure on investors already struggling to navigate rising protectionism.
U. S. 10-year Treasury yields US10YT=RR hit their highest in a month and traded at 2.9597 percent, following a rise in Europe’s benchmark 10-year German Bund DE10Y=TT.
“It’s all that concern investors have about the move from global quantitative easing to global quantitative tightening. That fear gets stoked when you have reports such as this,” said Rory McPherson, Psigma Investment Management’s head of investment strategy.
Sage Advisory Services Ltd Chief Investment Officer Bob Smith said there is no “800-pound gorilla” willing to absorb an increasing supply of bonds. The U. S. has several bond auctions scheduled this week.
“You’re sitting right in the dead of summer,” he said.
“I don’t think the super-heroes are on the [trading] desks right now. They’re probably on the beach.”
To view a graphic on Japanese bond yields jump to 6-month high, click: reut.rs/2LgVPjJ
The dollar index. DXY rose 0.14 percent off two-week lows it hit after Trump criticized the Federal Reserve’s rate hikes and accused the European Union and China of manipulating their currencies.
