Treasuries Slide, Dollar Gains as Busy Week Begins

EghtesadOnline: U.S. Treasuries extended a selloff that’s taken yields to the highest since early 2014 as traders gear up for a hectic week of data and policy announcements. The dollar climbed and stocks edged lower as the euro, Swiss franc, yen and pound all retreated.

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29 January 2018

The greenback advanced after capping a seventh week of losses on Friday, and U.S. stock futures fell. The yen weakened as the Bank of Japan downplayed Governor Haruhiko Kuroda’s comments on stronger inflation, and the British pound declined as pressure built on Prime Minister Theresa May over Brexit. The euro retreated as German bonds dropped for a fourth day, while the Stoxx Europe 600 Index turned lower after benchmarks were mixed in the Asian session, Bloomberg reported.

“The higher Treasury 10-year yield is spurring dollar-buying,” said Ko Haruki, head of the financial solutions group at CIBC World Markets (Japan) in Tokyo. “The dollar is consolidating with major currencies failing to break Thursday’s highs.”

Janet Yellen’s final policy meeting as Federal Reserve chair will be the main focus of investor attention in what’s shaping up to be another active week for markets still finding their feet after the recent dollar selloff. There’s a string of fresh economic data due, as well as a State of the Union address from President Donald Trump and earnings releases from the world’s biggest tech companies.

Elsewhere, U.S. oil fell, though it’s at about its strongest level in five months relative to global benchmark Brent crude as a weaker dollar and falling stockpiles boost the American marker. Metals advanced amid optimism over global growth and the impact of the softer greenback, with zinc soaring to the highest level in more than a decade.

Bitcoin climbed, holding its value above $11,000 even after a heist of nearly $500 million in a different digital token spurred calls for more cryptocurrency regulation.

Here are some important things to watch out for this week:

Federal Reserve policy makers gather for Chair Janet Yellen’s final meeting on interest rates Wednesday before her term ends

President Trump delivers his first State of the Union address.

Tech giants Microsoft Corp., Facebook Inc., SAP SE, Alibaba Group Holding Ltd.,Apple Inc., Alphabet Inc. and Amazon.com Inc. will announce earnings. Large-caps McDonald’s Corp., Exxon Mobil Corp., Merck & Co. Inc., Roche Holding AG, Daimler AG, Deutsche Bank AG and Boeing Co. also report.

U.S. employers probably added more jobs in January than a month earlier, economists forecast before the Friday report.

Bank of England Governor Mark Carney will speak before the U.K. Parliament’s Economic Affairs Committee in London Tuesday.

The sixth round of North American Free Trade Agreement talks conclude in Montreal.

Gauges of Chinese manufacturing and services industries are due Wednesday.

The euro area’s twin obsessions — growth and inflation — are on display this week. On Tuesday, data may show the economy with a solid expansion at a 0.6 percent quarterly rate. On Wednesday, the core euro-zone inflation report may show an uptick from a year ago to 1 percent this month.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index dipped 0.1 percent as of 7:27 a.m. New York time.

The MSCI World Index of developed countries fell 0.1 percent, the first retreat in more than a week.

The MSCI Asia Pacific Index decreased 0.1 percent.

Japan’s Nikkei 225 Stock Average fell less than 0.05 percent to the lowest in more than three weeks.

The MSCI Emerging Market Index sank 0.4 percent, the first retreat in more than two weeks and the largest decrease in almost three weeks.

The U.K.’s FTSE 100 Index jumped 0.2 percent.

Futures on the S&P 500 Index sank 0.3 percent and the largest decrease in a month.

Currencies

The Bloomberg Dollar Spot Index jumped 0.3 percent, the biggest increase in more than six weeks.

The euro dipped 0.4 percent to $1.2382, the largest decrease in more than a week.

The British pound declined 0.7 percent to $1.4063.

The Japanese yen dipped 0.2 percent to 108.79 per dollar, the largest decrease in more than a week.

Bonds

The yield on 10-year Treasuries jumped six basis points to 2.72 percent, the highest in almost four years on the biggest surge in almost three weeks.

Germany’s 10-year yield jumped five basis points to 0.68 percent, the highest in more than two years on the largest surge in almost three weeks.

Britain’s 10-year yield rose one basis point to 1.455 percent, the highest in a year.

Commodities

West Texas Intermediate crude fell 0.7 percent to $65.69 a barrel, the largest fall in more than a week.

Gold fell 0.5 percent to $1,342.73 an ounce.