U.S. government bonds based on recent gains and technology stocks have raised Europe’s main capital gauge as investors moved further away to wait for the Federal Reserve to quickly regain its support for the U.S. stock market. it was a pandemic for the financial markets.
The yield on the 10-year U.S. Treasury bond, which moves inversely to its price, fell 0.02 percentage points to 1.348 percent, touching on the fresh minimum of four months. The equivalent yield in Germany’s Bund fell by the same amount to minus 0.283 per cent, its lowest since mid-April.
The 10-year Treasury yield approached 1.8 percent in March, as the price of debt was depressed by fear that the world’s most influential central bank would respond to a rapid U.S. economic recovery and rising inflation with a rapid round of interest rate hikes.
But nerves over the Fed moving to cool an overheating economy have been ruled out by forecasts that U.S. GDP growth, which is projected to have reached an annualized pace of at least 9 percent in the second quarter of 2021, it is on track to emerge.
“Bond markets express a vision that we are approaching the slowdown phase of the economic cycle,” said Gergely Majoros, portfolio director at Carmignac.
Majoros added that markets fear that the Fed will “gradually normalize” monetary policy, while nerves over inflation have been calmed by US President Joe Biden cut the price on its infrastructure stimulus spending package offered more than half at $ 1tn.
The Stoxx Europe 600 stock index rose 0.5 percent Wednesday, up from a 1.5 percent gain for its technology subindex. Futures markets have signaled that Nasdaq Composite focused on Wall Street technology will gain 0.5 percent in New York’s top businesses. Contracts on the broader-based S&P 500 stock index rose 0.2 percent.
While global stocks were still trading around record highs, Majoros explained this by reflecting a renewed buyout of shares in technology and healthcare companies that were “able to grow independently of economic cycles”.
Later Wednesday, the U.S. central bank will release the minutes of its June meeting, when officials presented their projections for the first one-year post-pandemic interest rate hike to date. 2023.
These will be scrutinized by investors for signals about when the Fed plans to cut its $ 120 billion a month in pandemic-era debt purchases, even if economists don’t largely expect any formal announcement until the end of the year.
“The Fed’s minutes will probably mark the risk of this week’s key event, but we don’t deal with the blow due to strong directional indications,” said Mazen Issa, senior foreign exchange strategist at TD Securities.
Elsewhere in the markets, Brent crude rose 1.6 percent to $ 75.71 a barrel in a partial recovery from a 3.4 percent drop Tuesday. The oil benchmark has fallen after discussions between members of the Opec + group of producer nations finished earlier in the week without any agreement to liquidate the Covid-19 supply boards.
“If the current stand-off continues, comply with [the] the share of production will eventually deteriorate, “said Morgan Stanley analysts.” Much of Opec’s reserve capacity could reach the market quickly. “
The dollar index, which measures the green dollar against major currencies and had rebounded after the June Fed meeting, has been held near its highest level since early April before the minutes of the central bank. The euro was also stable at $ 1.1817, around its weakest level since April 5th.