Get 40% Off
🤑 This hedge fund gained 26.16% in the last month. Get their top stocks with our free stock ideas tool.See stock ideas

GLOBAL MARKETS-U.S. 10-year yield heads for biggest monthly rise in over a year

Published 2016-08-31, 07:44 a/m
© Reuters.  GLOBAL MARKETS-U.S. 10-year yield heads for biggest monthly rise in over a year
EUR/USD
-
USD/JPY
-
UK100
-
XAU/USD
-
DE40
-
JP225
-
DBKGn
-
CBKG
-
SOGN
-
AAPL
-
GC
-
LCO
-
ESM24
-
CL
-
CME
-
US2YT=X
-
US10YT=X
-
FTEU3
-
MIAPJ0000PUS
-
MIWD00000PUS
-

* U.S. bond yields, dollar rise

* Fed rate expectations strengthen

* Stocks capped, German banks in focus

By Jamie McGeever

LONDON, Aug 31 (Reuters) - U.S. Treasury 10-year yields were on course for their biggest monthly increase in more than a year on Wednesday as investors built up bets that the Federal Reserve will raise interest rates before the year is out.

The growing prospects of a rate hike, perhaps next month, lifted the dollar against many major currencies, pushing it up to a one-month high against the Japanese yen.

An increase in market-based rates and a firm dollar initially kept a lid on world stocks, but Europe hit a two-week peak, following a 1 percent rally in Japan's Nikkei 225, driven by the weak yen.

U.S. futures pointed to a flat open on Wall Street ESc1 .

Notable gainers in Europe were Commerzbank CBKG.DE and Deutsche Bank DBKGn.DE , both up around 4 percent, after a German magazine reported that the German banks had considered a merger in the past.

Deutsche boss John Cryan poured cold water on a tie-up, but said more bank mergers were needed in Europe. Erlam, senior analyst at Oanda, said markets were focused on the U.S. non-farm payrolls report for August, which is due on Friday.

"Two excellent jobs reports in June and July have put a rate hike this year well and truly back on the table, but it would seem that investors want at least one more in order to be convinced," he said.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"Another strong report will be very difficult to ignore and we could see some serious repricing ahead of the meeting in three weeks' time," he added.

Benchmark 10-year U.S. Treasury yields were up 1 basis point at 1.58 percent US10YT=RR , bringing the increase over August up to 12 basis points, the most since June last year.

Two-year yields, which are more sensitive to near-term rate hike expectations, were also up 1 basis point at 0.81 percent US2YT=RR . They have risen nearly 15 basis points this month, the most since November last year.

FED OFFICIALS SPEAK

Friday's U.S. jobs report is expected to show employers added 180,000 jobs in August, according to the median estimate of 89 economists polled by Reuters. ECONUS

Fed Vice Chairman Stanley Fischer said in an interview on Tuesday that the job market is nearly at full strength and the pace of interest rate increases will depend on how well the economy is doing. Wednesday Chicago Fed President Charles Evans highlighted sluggish growth and the case for keeping rates lower for longer, while Boston Fed president Eric Rosengren said higher rates could shield the economy from risks such as a commercial real estate bubble. of Tuesday, markets were pricing in a 24 percent chance of a U.S. rate hike next month, according to CME Group's (NASDAQ:CME) FedWatch tool, and a more than 50-50 chance of higher rates by the end of the year.

The dollar rose a third of one percent against the yen to a one-month high of 103.34 yen JPY= , and the euro slipped to $1.1130 EUR= .

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"It's finely balanced and remarkably stable ... and yet dollar/yen moved higher again, setting the scene for the Japanese equities bounce overnight," Societe Generale (PA:SOGN) FX strategists said on Wednesday, adding that the dollar would have to break above 105 for this move to look like much more than "noise".

The FTSEuroFirst index of leading 300 shares was up 0.3 percent at 1,361 points .FTEU3 , and Germany's DAX and Britain's FTSE 100 were both down 0.1 percent .GDAXI .FTSE .

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.35 percent and global stock index was flat .MIWD00000PUS .

On Wall Street on Tuesday, markets logged losses, dragged down by shares of Apple Inc AAPL.O after antitrust regulators ordered the company to pay about $14.5 billion in back taxes.

Crude oil futures continued to slip after ending down for a second straight day on Tuesday, on worries of oversupply and a strong dollar. O/R

Brent crude LCOc1 fell 1.1 percent to $47.84 per barrel after shedding 1.8 percent on Tuesday, but remains on track for a near 13 percent gain in August.

U.S. crude CLc1 was down 0.8 percent at $45.98 after losing 1.3 percent overnight. It is set to end the month 10.5 percent higher.

Spot gold XAU= edged up 0.2 percent to $1,313 an ounce after tumbling to as low as $1,308.65 on Tuesday, its lowest since late June, pressured by the stronger dollar and growing expectations of higher U.S. rates. It is headed for a 2.8 percent decline in August.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Shanghai CSI 300 and global effects interactive

https://t.co/YqIYLIbInP Chinese A-shares vs developed and emerging stocks

http://link.reuters.com/rac25w

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Alexander Smith)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.