Treasuries Fall as Gold Prices Rise, Stocks Mixed: Markets Wrap

(Bloomberg) — Treasury bonds slipped and gold fell from session highs on Monday as markets pared back some of Friday’s moves that defied Federal Reserve Chairman Jerome Powell’s reminder that policymakers are in no hurry to raise interest rates reduce.

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Treasury yields rose across all maturities, with the benchmark 10-year Treasury yield at around 4.25%. U.S. Treasuries rallied on Friday as swaps priced in a tapering by May, even after Powell said the central bank was prepared to raise interest rates further if necessary, while noting that policy was “well in hawkish territory.”

Meanwhile, gold slipped from previous intraday highs to settle at around $2,085.34 an ounce, still on track for a record close. Bitcoin climbed nearly 3% to its highest level since April 2022, extending its multi-month rise on expectations of new U.S. exchange-traded fund approvals. Asian stocks performed mixed, with Australian and Korean stocks gaining while Japanese stocks fell. S&P 500 futures were stable.

“We are in a zone of uncertainty” with a lot of economic data ahead of the Fed’s policy meeting next week, Fundstrat research director Tom Lee said in a note on Sunday. “Markets could be consolidating,” he added, but “we believe dip buying will prevail and December is a bullish month” for U.S. stocks.

Hong Kong and mainland Chinese stocks fell behind. However, shares in troubled developer China Evergrande Group rose as much as 22% after a Hong Kong court again postponed a decision on whether to wind up the world’s most indebted real estate developer.

Oil traded lower amid continued skepticism that recent OPEC+ supply cuts will turn the market tide.

The story goes on

Sticky inflation

This week, traders will be looking for clues about the health of the global economy as Australian growth, Chinese inflation and US non-farm payrolls data are due. The Reserve Bank of Australia is expected to set a hawkish tone as it leaves its key interest rate unchanged on Tuesday after Governor Michele Bullock warned that inflation was now of its own making.

While weaker-than-expected inflation will keep the RBA on hold, “stubborn ‘homegrown’ services inflation will ensure a tightening bias is maintained,” Tony Sycamore, an analyst at IG Group in Sydney, wrote in a note to clients . “A rate hike in February will depend on the December quarter inflation outcome, which is due to be published at the end of January.”

U.S. airline stocks will be in focus when Wall Street reopens Monday after Alaska Air Group Inc. agreed to buy rival Hawaiian Holdings Inc.’s Hawaiian Airlines in a $1.9 billion deal.

Investors will also keep an eye on geopolitical tensions in the Middle East. Israel has resumed its military operation in Gaza, a US warship was attacked in the Red Sea and Houthi rebels in Yemen said they had carried out operations against two Israeli ships.

Important events this week:

  • The minutes of Riskbank’s November meeting were published on Monday

  • US factory orders, durable goods, Monday

  • Reserve Bank of Australia interest rate decision, Tuesday

  • Japan’s CPI for Tokyo, Tuesday

  • China Caixin Services PMI, Tuesday

  • South Korea CPI, GDP, Tuesday

  • Eurozone PMIs, Tuesday

  • Australia’s GDP, Wednesday

  • Eurozone retail sales, Wednesday

  • Bank of Canada interest rate decision, Wednesday

  • China trade, foreign exchange reserves, Thursday

  • Eurozone GDP, Thursday

  • Germany’s industrial production, Thursday

  • US wholesale inventories, initial jobless claims, Thursday

  • Japanese household spending, GDP, Friday

  • US non-farm payrolls, consumer sentiment at the University of Michigan, Friday

Some of the key moves in the markets:

Shares

  • S&P 500 futures fell 0.1% at 1:51 p.m. Tokyo time. The S&P 500 rose 0.6% on Friday

  • Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.3%

  • Japan’s Topix index fell 0.6%

  • Hong Kong’s Hang Seng Index fell 0.6%

  • China’s Shanghai Composite Index was little changed

  • Australia’s S&P/ASX 200 index rose 0.8%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro fell 0.1% to $1.0873

  • The Japanese yen was little changed at 146.76 per dollar

  • The offshore yuan fell 0.3% to 7.1425 per dollar

  • The Australian dollar fell 0.3% to $0.6658

Cryptocurrencies

  • Bitcoin rose 2.8% to $40,853.95

  • Ether rose 1.9% to $2,225.72

Tie up

  • The 10-year Treasury yield rose six basis points to 4.25%

  • Japan’s 10-year yield fell one basis point to 0.690%

  • Australia’s 10-year yield fell three basis points to 4.46%

raw materials

  • West Texas Intermediate crude fell 0.7% to $73.56 a barrel

  • Spot gold rose 0.6% to $2,085.06 an ounce

This story was produced with support from Bloomberg Automation.

– With assistance from Michael G. Wilson.

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