Stocks, futures extend losses; bond selloff eases
BNN Bloomberg
Stocks extended declines Friday along with American index futures as red-hot U.S. inflation stoked bets on faster Federal Reserve interest-rate hikes amid febrile speculation about the monetary-policy outlook.
Stocks extended declines Friday along with American index futures as red-hot U.S. inflation stoked bets on faster Federal Reserve interest-rate hikes amid febrile speculation about the monetary-policy outlook.
The Stoxx Europe 600 index dropped more than 1 per cent, with technology and real-estate shares leading the decline. Carmakers outperformed after strong results from Mercedes-Benz AG. The benchmark remains on track for its first weekly advance this year. Contracts on the S&P 500 and Nasdaq 100 retreated along with an Asia-Pacific stock gauge.
A selloff in sovereign bonds eased, with the 10-year Treasury yield falling about three basis points to hover around the 2 per cent level. The two-year yield was little changed after jumping the most since 2009 on Thursday. Bonds across Europe were mixed, with Germany’s 10-year yield dropping two basis points. The dollar rose and commodity-linked currencies slid. The pound erased a decline after data showed the U.K. economy expanded at the fastest pace since World War II last year.
Bonds were pummeled Thursday by the surprise jump in U.S. inflation that stirred hawkish comments from St. Louis Fed Chair James Bullard, who said he supports raising rates by a full percentage point by the start of July, including the first half-point hike since 2000. He raised the possibility of a move in between scheduled policy reviews. Other Fed officials, though, are in no rush to raise rates prior to their meeting next month, nor does a 50 basis points March move appear likely yet.
Markets are struggling to adjust to the withdrawal of pandemic-era stimulus as officials fight inflation. The flattening Treasury yield curve suggests investors expect slowing economic growth as the Fed increases rates and reduces its balance sheet to curb price pressures.
