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.<\/b>
\nNEW 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\u2019s 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\u2019s benchmark 10-year German Bund DE10Y=TT.
\u201cIt\u2019s 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,\u201d said Rory McPherson, Psigma Investment Management\u2019s head of investment strategy.
Sage Advisory Services Ltd Chief Investment Officer Bob Smith said there is no \u201c800-pound gorilla\u201d willing to absorb an increasing supply of bonds. The U. S. has several bond auctions scheduled this week.
\u201cYou\u2019re sitting right in the dead of summer,\u201d he said.
\u201cI don\u2019t think the super-heroes are on the [trading] desks right now. They\u2019re probably on the beach.\u201d
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\u2019s rate hikes and accused the European Union and China of manipulating their currencies.
Beijing said it has no intention of devaluing the yuan to help exports.
\u201cWe see the latest news on trade policy as pointing to continued high risk of escalation between the U. S. and China, and a renewed focus of the Trump Administration on currency matters,\u201d Goldman Sachs analysts said.
Trump\u2019s warnings about excessive interest rate hikes last week also widened the gap between short and long-term Treasury yields. That \u201csteepening\u201d of the yield curve continued on Monday, with yields on 30-year Treasuries more than 0.46 percentage points higher than their 2-year counterparts, the biggest gap in nearly a month. US2US30=TWEB
Short-end yields are influenced by U. S. monetary policy, and longer-term government bonds are driven by more by inflation and growth expectations. A shrinking gap between yields this year has been seen as a possible sign of a coming recession. U. S. STOCKS MANAGE GAINS
Trump\u2019s threats to slap duties on all $500 billion of U. S. imports from China triggered selloffs across global stock markets that hit market-leading technology names, such as Amazon.com Inc ( AMZN. O).
Yet U. S. equities largely dodged threats of further American tariffs on China, rising ahead of potentially blockbuster earnings. Financials stand to benefit from a steeper curve because they borrow at short-term rates and lend over longer time periods.
MSCI\u2019s gauge of stocks across the globe. MIWD00000PUS shed 0.03 percent, with stocks broadly lower across Europe, Asia and emerging markets.
The Dow Jones Industrial Average. DJI rose 7.93 points, or 0.03 percent, to 25,066.05, the S&P 500. SPX gained 4.37 points, or 0.16 percent, to 2,806.2 and the Nasdaq Composite. IXIC added 13.53 points, or 0.17 percent, to 7,833.73.
Investors are bracing for a packed earnings week, including results from Google parent Alphabet ( GOOGL. O), and a meeting between European Commission President Jean-Claude Juncker and Trump to discuss threatened tariffs. OIL PRICES SWING
Oil lost strong early gains on U. S.-Iran tensions after traders weighed the risk that Saudi Arabia and other large producers could ramp up production ahead of a November deadline for other countries to comply with U. S. sanctions on Iranian crude sales.
U. S. crude CLcv1 fell 0.76 percent to $67.74 per barrel and Brent LCOcv1 was last at $72.69, down 0.52 percent.
In metals, both copper and gold neared one-year lows. Copper CMCU3 — among the most sensitive to trade tensions — lost 0.16 percent, trading at $6,137.50 a ton.
Spot gold, hit by a strong greenback that makes the metal priced in dollars more expensive to foreign buyers, dropped 0.6 percent to $1,224.01 an ounce. XAU=<\/p>\n