Latest news with #bondYields
Zawya
10-07-2025
- Business
- Zawya
Gold edges higher on softer dollar, trade war intensifies
Gold prices edged higher on Thursday, helped by a slight retreat in the dollar and bond yields, while investors kept a close tab on trade negotiations as U.S. President Donald Trump broadened his tariff war. Spot gold rose 0.1% to $3,316.77 per ounce by 0355 GMT. U.S. gold futures were up 0.2% at $3,325.60. "Gold bounced off a technical support level and also, the broader dollar declined," said Nicholas Frappell, global head of institutional markets at ABC Refinery. Trump escalated his tariff campaign on Wednesday, announcing a 50% tariff on U.S. copper imports and a 50% duty on goods from Brazil, both effective on August 1. Trump also issued tariff notices for seven minor trading partners, adding to 14 others issued earlier in the week, including South Korea and Japan, with 25% levies set to take effect on August 1 unless agreements are reached. "The market impact of tariffs seems to lessen with each new headline. Tariff fatigue is here, and traders need a new catalyst to awaken volatility from its lull," said Matt Simpson, a senior analyst at City Index. The U.S. dollar index edged down 0.2%, while the yield on benchmark 10-year U.S. Treasury notes retreated from a three-week high. Lower bond yields reduce the opportunity cost of holding non-yielding bullion, while a weaker dollar makes gold cheaper for holders of other currencies. Minutes of the Federal Reserve's June 17-18 meeting showed that only "a couple" of Fed officials believed interest rate cuts could happen as early as this month, with most favouring reductions later this year due to inflation concerns tied to Trump's tariff policies. The Federal Open Market Committee unanimously voted to hold rates steady at its June meeting, with the next policy meeting scheduled for July 29-30. Spot silver edged up 0.3% to $36.44 per ounce, platinum fell 0.2% to $1,345.03 and palladium lost 0.2% to $1,102.69. (Reporting by Anmol Choubey in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)
Malay Mail
26-06-2025
- Business
- Malay Mail
Kenanga sees Malaysian bond yields inching up amid global trade jitters
KUALA LUMPUR, June 26 — Malaysia's bond yields may rise modestly in the near term amid renewed global trade tensions, said Kenanga Investment Bank Bhd (Kenanga Research). The investment bank said markets are growing wary of escalating United States-European Union (US-EU) tariff frictions, Donald Trump's forthcoming fiscal bill, and the potential reimposition of tariffs in the weeks ahead. 'Investors will closely monitor upcoming US economic data for signs of weakness that could justify rate cuts by the US Federal Reserve (Fed),' it said in a research note today. According to Kenanga Research, yields on Malaysian Government Securities (MGS) and Government Investment Issues (GII) fell by 0.1 to 7.9 basis points (bps) across the curve over the week. The 10-year MGS eased by 4.6 bps to 3.54 per cent, while the 10-year GII slipped by 3.6 bps to 3.54 per cent. 'Initial risk-off sentiment, spurred by US involvement in the Iran-Israel conflict, dissipated following the announcement of a ceasefire. 'Market sentiment was further buoyed by the signing of a free trade agreement with the European Free Trade Association (EFTA) members—Switzerland, Norway, Iceland, and Liechtenstein—alongside deepening economic ties with Kyrgyzstan and Uzbekistan,' it said. Additionally, constructive developments in Malaysia-US tariff negotiations and reports of Intel's planned semiconductor expansion added to the positive tone, strengthening Malaysia's appeal as an investment destination. — Bernama
Reuters
23-06-2025
- Business
- Reuters
TRADING DAY All aboard the 'risk on' rollercoaster
ORLANDO, Florida, June 23 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Stocks flew, oil sank, and bond yields tumbled on Monday in a highly volatile start to the week, as traders digested Iran's response to the U.S. strikes on its nuclear sites and a string of dovish remarks from Federal Reserve officials. In my column today I ask a simple question, one which has several plausible answers: Who's selling the dollar? More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves All aboard the 'risk on' rollercoaster Early on Monday, oil prices were up 6% at a five-month peak on fears that Iran could seriously disrupt global crude supplies by closing the Strait of Hormuz. Several Middle East countries closed their airspace, and the dollar was rallying strongly. The reversal by the close of U.S. trading was remarkable - oil fell 7% and broke below its 200-day moving average, stocks closed firmly in the green and the dollar ended lower. What was the catalyst? There were probably two. The first was Tehran's response to Washington's attacks on its nuclear facilities on Saturday. Iran attacked a U.S. military base in Qatar, but took no action to disrupt oil and gas tanker traffic through the Strait of Hormuz. Oil's stunning 13 percentage point swing on Monday was an indication of the premium that had been built into the price on fears that global supply could be disrupted. If supply is maintained, the collective sigh of relief will extend to businesses, households, and policymakers around the world. And this is where the second catalyst comes in - inflation expectations and monetary policy. Two Federal Reserve officials struck a dovish tone in their public remarks on Monday, Chicago Fed President Austan Goolsbee and Vice Chair for Supervision Michelle Bowman. They come on the heels of Governor Christopher Waller on Friday. Goolsbee and Waller are perhaps the two most dovish of all the Fed's 19 policymakers, while Bowman has for years been at the opposite end of the 'hawk-dove' spectrum. But on Monday she said she would consider voting for a rate cut as early as next month as long as inflation pressures remained contained. If the worst of the oil price spike has now been and gone - that's a big 'if', given how fragile and fluid the situation in the Middle East is - then disinflationary forces and soft growth and labor market dynamics could take on more significance for policymakers and investors alike. That's all very hypothetical at this stage, but Monday's sharp moves are an indication of where positioning and sentiment have been building in recent weeks. Next up is Fed Chair Jerome Powell, who delivers his semi-annual testimony to Congress on Tuesday and Wednesday. Will he nod to the Waller-Goolsbee-Bowman view, repeat the hawkish signals from last week's revised 'dot plot', or hold the narrowing middle line between the two? Who's selling? Breaking down the dollar's breakdown With the dollar poised for its worst first-half performance since 1986, the selling may seem to be coming from everyone, everywhere, across every asset class. To some extent, that's true. Investors globally appear to be gradually reducing their exposure to dollar-denominated assets, driving the greenback down to its lowest level against a basket of major currencies in three and a half years. But some pressure points are greater than others. Unsurprisingly, non-U.S. investors are responsible for the bulk of the selling, with equity-related selling pressure concentrated among European investors and fixed income-based selling mostly coming from Asia. According to Bank of America's FX strategy team, European "real money" investors - institutions like pension funds and insurance companies - are the main drivers of the dollar's selloff in the second quarter, slashing their dollar positioning to the lowest since 2022 in a matter of weeks. But the story might not be so straightforward. While European investors increasing their dollar hedge ratios have garnered much attention recently, research shows that most of the dollar's average daily declines in the last few months have come in Asian trading hours, suggesting Asian holders of U.S. bonds may also be increasing their dollar hedges. So which is the bigger drag on the dollar: equity-led geographic diversification or fixed income selling? And where is the selling mostly coming from: Europe or Asia? At first glance, one might pin the blame on equities, as foreign holdings of U.S. stocks are larger than their U.S. debt assets in nominal terms. But percentage-wise, overseas investors' footprint in the U.S. fixed income markets is larger. Foreigners own just over $31 trillion of U.S. securities, with $17.6 trillion in equities and $13.6 trillion of bond holdings, according to the Bank for International Settlements. That represents around 18% of the overall U.S. equity market, compared with 21% of the U.S. agency and corporate bond market and a third of the U.S. Treasury market. Analysts at UBS estimate that euro zone investors account for 25% of the foreign-owned U.S. equity universe, having loaded up on U.S. stocks in recent years. This makes the dollar particularly vulnerable if Wall Street continues to underperform European and Asian markets, they reckon. Breaking down these exposures even further, they find that foreign investors' total net unhedged dollar asset exposure is $23.5 trillion. Of this, investors in G10 countries hold $13.4 trillion, with $9.3 trillion in equities and $4.1 trillion in fixed income. These are vast numbers, and it wouldn't require much of a switch to trigger large cross-border flows. UBS calculates that a hypothetical 5% reduction in G10 countries' dollar position would equate to around $670 billion of dollar selling. Most G10 countries, of course, are in Europe, so the bulk of that selling would come from there. While European investors have mostly been unloading equities thus far, it's good to remember that the region's investors significantly increased their exposure to U.S. bonds over the last decade too, particularly the 2014-2022 years when the European Central Bank's main interest rates were negative. UBS analysts estimate euro zone investors bought $3.4 trillion in foreign debt since 2014. So even a modest rebalancing away from U.S. bonds could have a meaningful impact on prices. Ultimately though, Asian investors still appear to wield more muscle in the U.S. bond market, owning around a third of foreign-held U.S. Treasuries and agency debt. And that figure is probably much higher given that euro zone, Caribbean and UK holdings include assets held on behalf of Asian countries, notably China. Up until this point, there has been no wholesale dumping of U.S. assets, and neither is there likely to be. But it is notable that U.S. assets are increasingly being held by private sector investors, who have replaced central banks as the main buyers of U.S. assets in recent years. The private sector is typically considered more price-sensitive than the official sector. That means these positions may prove less sticky than in the past, especially if the idea of waning "U.S. exceptionalism" truly takes root. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Zawya
19-06-2025
- Business
- Zawya
Euro zone bond yields edge higher with Middle East conflict, central bank meetings in focus
Euro zone yields were slightly higher on Thursday, as investors focused on a series of monetary policy decisions while watching developments in the Middle East. The U.S. central bank held rates steady as widely expected on Wednesday, with Chair Jerome Powell saying he expected to see more tariff-driven price hikes in coming months. Investors were also watching a series of central bank policy decisions in Europe, with Norway's central bank's surprise rate cut in focus. Meanwhile, financial markets remained on edge over the possible entry of the United States into the week-old Israel-Iran conflict. Germany's 10-year bond yield was up 2 basis points on the day at 2.52%, retracing some of the previous day's fall, but still trading within its recent range. The yield on the two-year Schatz was up half a basis point at 1.85%. Norway's central bank unexpectedly cut its policy interest rate by 25 basis points to 4.25% on Thursday, its first reduction of borrowing costs in five years. The decision sent yields on the 3-year Norwegian bond down 17 bps in their biggest intraday drop since March 2023. "Obviously, today's decision to cut rates was a big surprise," said Erica Dalstoe, chief strategist for Norway at SEB. After the earlier-than-expected reduction on Thursday, markets have now priced in the risk of an additional rate cut by the end of the year compared to the two cuts in 2025 expected previously, Dalstoe said. She said that "pretty much explains the reactions we're seeing in the short end of the yield curve." Elsewhere, the Swiss National Bank cut its interest rate to zero as expected. Investors will now turn to the Bank of England's policy decision and outlook later in the day, with the bank expected to keep rates unchanged. If the European Central Bank decides to move on interest rates in the next six months, it would most likely be a cut, ECB policymaker Francois Villeroy de Galhau said on Thursday, while Bundesbank President Joachim Nagel said the ECB was on the right track when it came to monetary policy. The ECB signalled a pause in policy easing this month despite projections showing price growth dipping below its 2% target temporarily due to the strong euro and low oil prices. Italy's 10-year bond yield, the benchmark for the euro zone periphery, was 3 bps higher at 3.515%. The gap between Italian and German yields was wider on the day at 99.10, after hitting its widest in three weeks earlier in the session. (Reporting by Linda Pasquini; Editing by Amanda Cooper, Emelia Sithole-Matarise and Jane Merriman)
Zawya
11-06-2025
- Business
- Zawya
Euro zone yields mixed before US data, markets await details on US-China deal
Euro zone government bond yields were mixed on Wednesday as investors awaited U.S. consumer price index data later in the session and details of the outcome of trade talks between the U.S. and China. China's Vice Premier He Lifeng said China and the U.S. should strengthen consensus and maintain communication, state news agency Xinhua reported on Wednesday, after the two countries agreed to get a delicate trade truce back on track. Germany's 10-year yield, the euro area's benchmark, was up 1.5 basis points at 2.55%. Negotiated wage growth across the 20-nation euro zone is seen at 3.1% this year, the ECB's monthly wage tracker showed. The ECB has long argued that wage growth around 3% would be consistent with its 2% inflation target. Money markets fully priced in a European Central Bank rate cut of 25 bps by December and an around 60% chance of the same move in September. The ECB's latest rate cut will help inflation bounce back to its 2% goal after an expected sag over the next year and a half, the ECB's chief economist Philip Lane said on Wednesday. Danske Bank has removed a July cut from its forecast, assuming a final 25 bps cut in September to 1.75%, with risks tilted towards one additional cut in the fourth quarter. It stated that the euro area economy was expanding but was edging close to stagnation, while the ECB was nearing success in its efforts to combat inflation. The U.S. Consumer Price Index report from the Labor Department on Wednesday could show the CPI, less the volatile food and energy components, rising by the most in four months. "The data is set to reinforce the Federal Reserve's wait-and-see stance ahead of next week's policy decision as the impact of higher tariffs remains limited for now," said Rainer Guntermann, strategist at Commerzbank. German 2-year yields were flat at 1.86%, while 30-year yields rose 3 bps at 3.03%. Italian 10-year yields were up 1 bp at 3.46%, leaving the gap between German and Italian yields at 88 bps. The spread hit 86.70 bps on Tuesday its lowest level since February 2021. "We had already exited our Italy vs Bund trade, but are keeping our Italy vs France trade, as the view also reflects our concerns over France's deficit and the political picture," said Mohit Kumar, chief economist Europe at Jefferies. Meanwhile British gilt yield rose, with the 10-year up 7 bps at 4.71%, as investors awaited a public spending review. In an address to parliament due after 1130 GMT, British finance minister Rachel Reeves will set out day-to-day budgets for government departments from 2026 to 2029 and investment plans out to 2030. (Reporting by Stefano Rebaudo, Editing by Andrew Heavens and Alex Richardson)
