Treasuries pared an overnight advance but the 10-year yield is still on course for one of its biggest weekly slides since June last year. At one point in U.S. hours the 30-year Treasury yield broke below 1.90% for the first time since February.
Oil headed for its biggest weekly loss since April. Bitcoin is again in the lower part of a trading range, emblematic of a reduced ardor for speculative investments like cryptocurrencies and meme stocks.
A key question now is whether investors will stick with the pandemic-era mantra of buying dips in risk assets, or interpret the bond-market rally as sign of a tougher economic outlook as the more infectious delta virus strain complicates the global reopening.
“Reflation requires not only the continual increase in growth, there’s a fiscal component to it and we’re seeing how hard it is to get some of that fiscal impulse to carry through,” said Marvin Loh, global macro strategist at State Street Corp. “Monetary policy continues to drive a lot of the excess growth, and we know what that story looks like, which is lower yields.”
Meanwhile, tension between the U.S. and China continues to bubble. Washington will add at least 10 Chinese entities to its economic blacklist as early as Friday over alleged human rights abuses and high-tech surveillance in Xinjiang, according to a report.
On the virus front, Pfizer Inc. plans to request U.S. emergency authorization in August for a third booster dose of its Covid-19 vaccine and said it’s confident it will be effective against the more-virulent delta variant.
Here are some events to watch this week:
- The Group of 20 finance ministers and central bankers meet in Venice on Friday
- China PPI and CPI data released on Friday
These are some of the main moves in markets:
- S&P 500 futures were down 0.2% as of 12:05 p.m. in Tokyo. The S&P 500 dropped 0.9%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 slipped 0.6%
- Japan’s Topix index retreated 2%
- Australia’s S&P/ASX 200 index lost 1.4%
- South Korea’s Kospi index shed 1.7%
- Hong Kong’s Hang Seng index added 0.6%
- China’s Shanghai Composite index fell 0.4%
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro traded at $1.1837
- The British pound was at $1.3774
- The Japanese yen was at 109.93 per dollar
- The yield on 10-year Treasuries rose two basis points to 1.32%
- Australia’s 10-year bond yield rose one basis point to 1.33%
- West Texas Intermediate crude was at $73.07 a barrel
- Gold was at $1,805.66 an ounce, up 0.2%
–With assistance from Claire Ballentine and Natalia Kniazhevich.