Treasuries fall as gold pars gains, stocks mixed: Markets wrap

(Bloomberg) — Treasuries slipped and gold fell from session highs as markets corrected some moves on Friday despite Federal Reserve Chairman Jerome Powell’s reminder that policymakers are in no rush to cut interest rates.

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Yields rose among maturities on Treasuries, with the benchmark 10-year trading at 4.23%. U.S. government bonds on Friday cut the price of swaps to May, even after Powell said the central bank was prepared to hike further if needed and noted that policy remained “within a restrained range.”

“We’re in a zone of uncertainty,” Tom Lee, head of research at Fundstrat, said in a note on Sunday, with plenty of economic data ahead of the Fed’s policy meeting next week. “Markets may consolidate,” he added, but added that “dip buying will prevail and December will be a good month for US stocks.”

Meanwhile, gold fell from the previous intraday high, trading at $2,084 an ounce and still nearing a record high. Bitcoin rose past the $41,000 level to its highest level since April 2022, continuing its multi-month rally on expectations of new exchange-traded fund approvals in the United States. Asian shares were mixed, with Australian and Korean shares gaining, while Japanese shares fell. European stock futures were little changed and US stocks were lower.

“We’ve seen a big shift in U.S. rates, with 10-year Treasuries down 75 basis points from their highs,” Eric Robertson, global president and chief strategy officer at Standard Chartered Bank, said on Bloomberg Television. “We now have nearly 140 basis points of rate cuts for next year. As long as those rate conditions hold, gold will remain supported over the next three to four weeks.

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Hong Kong and China’s main stocks were on the back foot. However, shares in distressed developer China Evergrande Group rose as much as 22% after a Hong Kong court again postponed a decision on whether to bail out the world’s most indebted property developer.

After Prime Minister Narendra Modi’s victory in three key state elections, the hope of policy continuity led Indian stock markets to a new high. Got government bonds.

The dollar traded in a narrow range against its major peers. Oil fell amid lingering doubts that OPEC+’s latest supply cuts would turn the tide on the market.

This week, traders will be watching for clues to the health of the global economy, with data on Australian growth, Chinese inflation and US non-farm payrolls all coming out. The Reserve Bank of Australia left its rate on hold on Tuesday after Governor Michael Bullock warned that inflation was now contained, which was expected to worsen.

While cooler-than-expected inflation could keep the RBA on hold, “sticky ‘domestic’ services inflation will ensure a tighter bias is maintained,” Tony Sycamore, analyst at IG Group in Sydney, wrote in a note to clients. “A rate hike in February will depend on the outcome of December quarter inflation due to be released at the end of January.”

U.S. airline stocks will be in focus when Wall Street reopens on 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 monitor 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 carried out operations against two Israeli ships.

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Highlights of this week:

  • Riskbank’s November meeting minutes were published on Monday

  • US factory orders, durable goods, Monday

  • Reserve Bank of Australia rate decision, Tuesday

  • Japan’s Tokyo CBI, Tuesday

  • China Caixin Services PMI, Tuesday

  • South Korea CPI, GDP, Tuesday

  • Eurozone PMIs, Tuesday

  • Australia GDP, Wednesday

  • Euro zone retail sales, Wednesday

  • Bank of Canada interest rate decision, Wednesday

  • China Trade, FX Reserves, Thursday

  • Eurozone GDP, Thursday

  • Germany Industrial Production, Thursday

  • US Total Inventories, Initial Jobless Claims, Thursday

  • Japan Household Expenditure, GDP, Silver

  • US nonfarm payrolls, University of Michigan Consumer Sentiment, Friday

Some key movements in the markets:

Shares

  • S&P 500 futures were down 0.2% as of 6:30 a.m. London time. The S&P 500 rose 0.6% on Friday

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

  • Euro Stoxx 50 futures were little changed

  • Japan’s TOPIX index fell 0.8%

  • Hong Kong’s Hang Seng index fell 0.5%

  • China’s Shanghai Composite fell 0.3%

  • Australia’s S&P/ASX 200 index rose 0.7%

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0876

  • The Japanese yen rose 0.1% to 146.66 per dollar

  • The offshore yuan fell 0.2% to 7.1396 per dollar

  • The Australian dollar fell 0.2% to $0.6659

  • The British pound fell 0.2% to $1.2684

Cryptocurrencies

  • Bitcoin rose 4.9% to $41,676

  • Ether rose 3.5% to $2,259.17

Bonds

  • The yield on 10-year Treasuries rose three basis points to 4.23%.

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

  • Australia’s 10-year yield fell five basis points to 4.45%

materials

  • West Texas Intermediate crude was down 0.9% at $73.44 a barrel.

  • Spot gold rose 0.6% to $2,084.27 an ounce

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This story was produced with the help of Bloomberg Automation.

–Michael G. With assistance from Wilson and Matthew Burgess.

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