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Yahoo
2 days ago
- Business
- Yahoo
Stocks ease, US yields rise after hot US inflation data shakes confidence in Fed rate cut
By Chibuike Oguh and Naomi Rovnick NEW YORK/LONDON (Reuters) -Global stocks edged lower on Thursday, with equities on Wall Street ending flat, while U.S. Treasury yields rose after market expectations for Federal Reserve interest rate cuts were shaken by surprisingly strong inflation data. The benchmark S&P 500 eked out a fresh closing high for the third straight session, while the Dow and the Nasdaq finished little changed. The Dow Jones Industrial Average eased 0.02%, the S&P 500 rose 0.03% and the Nasdaq Composite dipped 0.01%. "We've had a good ride for the last few trading days," said Genter Capital Management CEO Dan Genter. "The PPI (Producer Price Index) number was not something that was going to rally the market further, but it also wasn't something that was going to particularly scare the market." U.S. producer prices rose 0.9% in July, the Labor Department reported, surpassing consensus forecasts for a 0.2% gain. Investors have been watching for signs of inflation pressures from U.S. President Donald Trump's tariffs. European stocks held gains from earlier in the day and were last 0.55% higher. MSCI's gauge of stocks across the globe fell 0.12% to 951.91, taking a breather a day after hitting an all-time high. "I think the market is falling into an acceptance that the overall economy is slowing ... and having some confirmation with the inflation numbers puts us in a good place for at least two 25-basis-point cuts that this market is going to need for support," Genter added. U.S. Treasury yields leaped after the inflation data as expectations for jumbo Fed rate cuts faded. The two-year note yield was last up 4.5 basis points at 3.732%. The benchmark U.S. 10-year note yield rose 4.9 basis points to 4.289%. Money markets showed traders still almost unanimously expect the Fed to cut borrowing costs next month, although some traders have lowered their bets. Markets are predicting a 92.5% chance that the Fed will cut rates by 25 basis points in September, down slightly from 94.3% on Wednesday but up from nearly 59% a month ago, according to the CME FedWatch tool. "We have been too anxious to draw a conclusion that the economy is fine; it's not overheated," said Peter Andersen, founder of Andersen Capital Management in Boston. "But this wholesale data does show that perhaps there is some inflation working, and we shouldn't be so quick to conclude we need to cut interest rates." "It reinforces the case that the Fed might say we still don't have a clear picture yet, based on the tariffs in the employment picture to take any action, and I would expect that they would tend to be neutral and make no change in September as opposed to the majority of opinions out there," Andersen said. About 70% of global investors expect U.S. stagflation, with growth slowing as consumer price rises accelerate, to become the dominant market narrative within three months, a Bank of America survey found this week. The dollar rose against major peers after falling in the prior session. It strengthened 0.25% to 147.75 against the Japanese yen and was up 0.39% at 0.808 against the Swiss franc. The euro fell 0.49% to $1.1647. The dollar index tracking the greenback against peers, including the euro and Japan's yen edged 0.5% higher. Trump on Wednesday threatened "severe consequences" if Russian leader Vladimir Putin did not agree to peace in Ukraine at a Friday meeting and has also floated the idea of a second summit that would include Ukrainian President Volodymyr Zelenskiy. Brent crude, the global oil benchmark, rose from almost a two-month low to settle up 1.84% to $66.84 a barrel and U.S. crude added 2.09% to settle at $63.96. Spot gold fell 0.57% to $3,335.34 an ounce. U.S. gold futures for December delivery settled 0.7% lower at $3,383.20. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
Yahoo
6 days ago
- Business
- Yahoo
Debt market jitters signal caution for high-flying stocks
By Naomi Rovnick LONDON (Reuters) -Investors are backing out of or taking active bets against high-priced corporate credit, where they anticipate a correction in response to signs of slowing economic growth that could eventually impact stocks. In interviews and client research, global asset managers and some of the world's biggest banks cautioned that credit pricing had reached levels consistent with a much stronger economic outlook than official forecasters anticipate for this year. "We've turned very defensive in terms of developed market credit," said Mike Riddell, lead portfolio manager for strategic bond strategies at Fidelity International. "We have zero exposure in terms of cash bonds and are short high-yield," he added, referring to the use of derivatives products to bet an asset class will perform badly. The spread that measures the premium corporate bonds pay in interest over government debt, the main valuation metric for credit, dropped to just one basis point above its 1998 low on Jul. 29, Reuters analysis showed. Markets are rallying worldwide, with European stocks hitting their biggest weekly gain since late April and Wall Street indices close to record highs, but investors and analysts said credit was the strongest example of exuberance. As U.S. economic data softens, investors said corporate credit was most vulnerable to a sustained slowdown in the world's largest economy that could hit global growth, with equities likely to fall in turn. CREDIT MARKETS LEADING THE WAY Before 2018's U.S.-China trade war slump, 2022's rate rise rout and a similar shake-up in late 2023, a popular exchange-traded fund tracking high-grade corporate credit fell some time before world stocks. Stuart Kaiser, head of U.S. options strategy at Citi, said the bank's derivatives desks had in the last few weeks begun seeing significant demand from asset manager clients for products that bet against the performance of that iShares index or gauges of junk bonds. "It is probably macro investors taking a directional view or putting on a hedge against the rally we've seen in risk assets," he said. "The fact people are now hedging credit risk tells you they see reasonable downside to equity markets over the next three months." Lombard Odier Investment Managers' head of multi-asset Florian Ielpo said credit was "leading the market" already, based on shifts he had spotted under the surface of headline pricing. According to his own analysis of global credit indices, he said, the proportion of business bonds where spreads were still narrowing had fallen abruptly from 80% to 60% in the five days to August 4. "This is a significant move in the data and one you cannot ignore," Ielpo said, because it was not usual. He had just trimmed back a bullish derivatives trade on credit, he added. Amundi Investment Institute's head of developed market strategy Guy Stear said high-yield debt, which is dominated by borrowers from economically important industries, was looking most vulnerable to a correction that stock markets might follow. He said he expected, as early as October, to see jumps in high-yield refinancing costs and defaults driven by tariff-related cost increases or cash flow pain, sparking anxiety about jobs, investment and growth. "When credit markets come under pressure eventually equity markets come under pressure as well," he said. PRICING FOR GROWTH, NOT RECESSION Broadly, credit spreads where they are now imply a global growth forecast of almost 5%, which is far above current levels, UBS strategist Matthew Mish said in a note to clients. The International Monetary Fund forecasts 3% global growth this year. "The investment-grade market is pricing a Goldilocks scenario," Russell Investments global head of fixed income and foreign exchange strategy Van Luu said, adding he did not think this was accurate and had taken an underweight stance on credit as a result. The IMF has put 40% odds on the U.S. entering recession, with risks rising for other major economies if a weakening trend for the dollar that has boosted exporter nations goes into reverse. In a note to clients this week, UBS' Mish said: "many risk assets are pricing in a higher growth outlook than we expect. However, credit markets are outliers." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
31-07-2025
- Business
- Yahoo
Investors face global market reset as negative US bets crumble
By Naomi Rovnick LONDON (Reuters) -Investors' conviction that U.S. President Donald Trump's tariffs and debt spree would spark long-term pain for the dollar and U.S. stocks is crumbling, signaling pain ahead for assets across Europe and emerging markets that were boosted by this view. The dollar is heading for its first monthly gain this year, boosted by robust economic data, fading concern about the outlook for U.S. assets and a growing belief that the Federal Reserve may not cut interest rates again for some time. With artificial intelligence euphoria powering U.S. stock markets to consecutive daily peaks and relentless selling of the greenback going into reverse, European equity outperformance has stalled as the euro slides and a blistering gold rally stalls. "It's one of the biggest positions people have, being negative on the dollar and the U.S.," Pictet Asset Management co-head of multi-asset Shaniel Ramjee said. He was preparing to raise his dollar exposure from what he described as "practically zero", on expectations that U.S. economic trends and company earnings would start outshining Europe. A broad dollar revival, he added, might bring 2025's big market trends to a halt. The so-called "rest of the world trade", where investors have favoured international assets over the U.S., was led by a rush of speculative bets against the U.S. currency that has now slowed, Barclays analysis showed. COMEBACK European stocks, which posted their best-ever quarter relative to the U.S. in the three months to March, are now merely keeping pace with Wall Street's S&P 500 as both indices clock an approximately 8.4% year-to-date rise. As recently as mid-July, conviction that the dollar would weaken was the most crowded trade among global fund managers, Bank of America research showed. But currency traders who were making short-term bets against the greenback, which this year suffered its worst first-half slump since 1973, are now backing out. The dollar index is trading at two-month highs and is set for a 3% rise in July, the first monthly increase this year. The euro, which scored the best six-month run of its 26-year lifetime in the half-year to June, has fallen below $1.15, heading for its largest monthly drop since May 2023.. "We're seeing a rotation into U.S. equities, a rotation in currency markets and a rotation in (market) momentum," Edmond de Rothschild Asset Management multi-asset head Michael Nizard said. He cited Sunday's framework trade deal between Washington and Brussels as a major reason for the trend, which he did not expect to last until the end of the year, adding that he would buy the euro at around $1.14. TEMPORARY? Monica Defend, head of the investment institute at Europe's largest asset manager Amundi, said she was sticking to a long-term view that the dollar was set to decline because of Trump's borrowing plans and consistent attacks on Federal Reserve independence. But she said she was also prepared to change her view "if growth in the U.S. surprises nicely on the upside," in a persistent trend from here. Sterling has fallen 1.4% against the greenback this week and an index of emerging market equities has drooped for three days as a stunning year-to-date rally stalls. Gold, the standout trade of 2025, is heading for its first three-week losing streak since November, trading around $3,300 an ounce. Amundi's Defend expected U.S. tech stocks and AI exuberance to keep Wall Street equities outperforming from here. But she also expected U.S. growth to stall once tariffs started raising consumer prices. "The U.S. might continue to be exceptional, probably not on the macro (economic) front, but more on the equity market," she said. Nutshell Asset Management CIO Mark Ellis, whose UK-based fund changes the composition of its portfolios around twice a month, said he was not certain the U.S. market bounce-back could last beyond next week. For 50 years, August and September have been the S&P's worst months for returns compared to volatility, he said. "Around the end of this week is a good time to take risk off and I'll be more defensive going into historical summer volatility and weakness," he said. Barclays head of European equity strategy Emmanuel Cau, in a July 30 note to clients, issued a different warning. He noted that trend-following hedge funds called CTAs, whose trades are viewed as a barometer of the dominant market mood, had closed out bets against U.S. Treasuries and cut exposure to European stocks. A more persistent dollar bounce-back, he said, would be "a key pain trade" for global investors from here. Sign in to access your portfolio
Yahoo
25-07-2025
- Business
- Yahoo
Stocks drop worldwide as investors brace for crucial week
By Naomi Rovnick and Kevin Buckland LONDON/TOKYO (Reuters) -Investors cashed out of highly valued global stocks on Friday and the dollar headed for its biggest weekly drop in a month ahead of a crucial week for markets that includes Donald Trump's tariff deadline and key central bank meetings. MSCI's global equity index retreated from an all-time high and was 0.2% lower in early European trading while Japan's Topix index ended the day 0.9% lower after rising to a record on Thursday. Europe's STOXX 600 share index also fell 0.5% in early trade. Ahead of the August 1 deadline for U.S. trade deals with Europe and China, stock markets have been buoyed up by firm U.S. economic data and framed the risk of tariffs hitting growth as a reason to expect Federal Reserve rate cuts. "Higher (U.S.) inflation will, in time, result in weaker demand and weaker investment," UBS Wealth Management economist Dean Turner said. Van Luu, head of solutions strategy, fixed income and foreign exchange at Russell Investments, said he was waiting for a buying opportunity in U.S. Treasuries for this reason. "U.S. data looks astonishingly resilient," he said, but this likely reflected a spending rush before tariffs pushed business input costs and retail sticker prices higher. RISK EVENTS The past week saw U.S. trade agreements with Japan, Indonesia and the Philippines, while deal talks continued with South Korea. Next week brings the next Fed interest rate meeting, the closely watched monthly payrolls report, and earnings from Amazon, Apple, Meta and Microsoft. Trump has kept up pressure on Fed Chair Jerome Powell to cut rates after a rare presidential visit to the central bank on Thursday, although he said he did not intend to fire Powell, as he has frequently suggested he would. U.S. 10-year Treasury yields were steady at 4.41% while two-year yields, which track monetary policy bets, were also flat at 3.923%. Robust earnings from Google parent Alphabet took Wall Street's Nasdaq to a record high on Thursday but futures trading signalled the tech-heavy index would flatline at the start of cash trading in New York. Contracts tracking the blue-chip S&P 500 index were also flat in early European dealings. The Bank of Japan has its own policy announcement on Thursday, and Prime Minister Ishiba's Liberal Democratic Party holds a meeting on the same day. That's after the European Central Bank held rates steady on Thursday, pausing its easing campaign as it waited to assess the impact from U.S. tariffs. The euro was steady against the dollar on Friday at $1.1745, although German government debt sold off, with the yield on benchmark 10-year Bunds up 5 basis points (bps) in early dealings to 2.74%, the highest since March 28. Japanese government bond yields were steady on Friday at about 1.6%, a level last seen in October 2008, having ratcheted higher on concerns the political scale is tilting more towards fiscal stimulus. This came after big gains for opposition parties backing consumption tax cuts in Sunday's upper house election. Pressure is building on the more fiscally hawkish Ishiba to quit after his coalition lost its majority in the vote, having done the same in lower house elections last October. Gold eased 0.3% to around $3,356 an ounce. Brent crude futures gained 0.7% to $69.65 a barrel. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
11-07-2025
- Business
- Mint
High-priced stocks and bonds raise tariff threat for markets
Shares on Wall Street have hit record highs Bond markets price in slower growth Clearer picture will emerge in second half, say investors Either stocks or bonds could see steep correction, they say By Naomi Rovnick and Amanda Cooper LONDON, July 11 (Reuters) - Global markets are telling conflicting stories about the possible longer-term impact of U.S. tariffs on growth, a schism that investors say means either stocks or bonds could see a steep correction once it's clear which is right. U.S. President Donald Trump's erratic approach to trade policy that generated so much volatility earlier this year seems to have left markets wary of reacting to his near-daily announcements on who, or what, might get hit with tariffs. The latest target is Canada, which on Thursday Trump said will face a 35% duty, while most other trading partners will get blanket tariffs of 15% or 20%, eliciting barely a flutter in the broader markets. An announcement on Europe is imminent. Investors say this apparent composure is less about confidence in an ultimately benign longer-term outlook, and more typical of a late-stage bull market, where the optimists scramble to catch the rally before it fizzles out, while the pessimists quietly prepare for trickier times ahead. In one corner are riskier assets like stocks and cryptocurrencies. Shares on Wall Street have hit record highs, powered by enthusiasm around artificial intelligence and the prospect of a string of interest-rate cuts from the Federal Reserve as the economy gradually slows and the hit to inflation from tariffs proves mild so far. Bitcoin is near a record $112,000. In the other corner are government bonds, gold and even crude oil, all of which are reflecting a belief that tariffs could derail the U.S. economy and growth everywhere will falter. Premier Miton chief investment officer Neil Birrell said the second half of this year will be when the impact of Trump's tariffs becomes obvious. "It's difficult for me to look at all this with any form of confidence or certainty," he said, referring to the unpredictability of Trump's policymaking and the possible impact of his "One Big Beautiful Bill". His main concern about stocks was U.S. households' high participation in Wall Street, where a decline could quickly spread globally. "Any stress in the U.S. economy that impacts the consumer and then impacts equity markets becomes a rather brutal and bloody downward spiral." Trump's 90-day pause after April 2's "Liberation Day" tariff announcement has been replaced by a scattergun application of levies on trading partners large and small, right ahead of the second-quarter earnings season which may yield the first clues about how severe the hit to corporate profits could be. "Things have settled down but not in a positive way," Amundi's head of global macro Mahmood Pradhan said. "The effective tariff rate for all imports coming into the U.S., if you calculated an average across the board, would be about 15%," he said. "This is broadly negative for growth in every country that is involved in world trade." The World Bank last month cut its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, saying that higher tariffs and heightened uncertainty posed a "significant headwind" for nearly all economies. With so much uncertainty hanging over U.S. assets, investors' cash has flowed elsewhere for much of this year, into the likes of European stocks and bonds, gold, Chinese tech stocks or emerging market currencies. Greasing the wheels of the stock market rally has been anticipation that Fed Chair Jerome Powell will cave to pressure from Trump to deliver a rapid string of rate cuts. Yet the data has been too strong to justify an aggressive loosening of monetary policy and too soft to argue that tariffs are having no effect. U.S. employment figures show the economy is still creating jobs at a firm clip, while business activity surveys show factories and services are flagging. In the meantime, Trump's landmark tax cut and spending bill will add an extra $3.3 trillion to the national deficit. Benchmark 10-year U.S. Treasury yields have retreated from January's 15-month peaks at 4.8% to 4.35%. "Bonds are much more focused on growth (falling) than on inflation so when you see an upturn in trade war announcements bond yields tilt towards lower growth and rate cuts. But equities are emboldened because tariffs haven't shown up in the inflation numbers yet," Joost van Leenders, senior investment strategist at Dutch asset manager Van Lanschot Kempen, said. "We don't think this can continue," he said, adding he remains neutral on equities, with a small overweight position in government bonds. Gold has staged a blistering 26% rally this year, topping $3,300 an ounce, serving as a hedge against macro and geopolitical uncertainty, as well as an alternative to the dollar, the biggest tariff casualty, which has lost over 10% in value this year against a basket of currencies. Kevin Thozet, investment committee member at French asset manager Carmignac, said he is hedging against a fall in the U.S. stock market, but believes this is unlikely right now because retail traders are diving in to buy market dips. Further out, he said Trump's tax cut bill might offset some of the impact of tariffs, but the extra debt it could take to fund those cuts could drive the 10-year Treasury yield to 5% in the coming three months, a level that policymakers worry about given its impact on households, companies and the government. "We see significant cracks in U.S. markets, even though the Fed has ample room to cut," he said. (Reporting by Amanda Cooper and Naomi Rovnick; Editing by Elaine Hardcastle)
