(Bloomberg) — Global bond markets attempted to recover from an aggressive selloff that drove steep losses in Treasuries and U.S. stocks Thursday. The dollar extended overnight gains.
Shares in Europe dropped, with the Stoxx Europe 600 index heading for its biggest plunge since January. Futures on the Nasdaq 100 pointed to further declines after the gauge fell 3.6% as bets on a cyclical rotation hammer tech stocks.
The 10-year Treasury yield fell back below 1.5% after trading as high as 1.6% Thursday, when a poorly received government auction led to forced selling by holders of mortgage securities. Yields on core European bonds also ticked lower, while Japan’s benchmark hovered near its highest level since early 2016.
Investors are getting increasingly worried that accelerating inflation could trigger a pullback in monetary policy support that has fueled gains in risk assets amid the pandemic. Federal Reserve officials so far say surging Treasury yields reflect optimism and have stressed that the central bank has no plans to tighten policy prematurely.
What Investors Are Watching After the Spike in Treasury Yields
“A move of this magnitude is not healthy for markets and equities are rightfully acting negatively to it,” said Matthew Miskin, the co-chief investment strategist at John Hancock Investment Management. “We will be watching to see if the Fed pushes back more meaningfully on the recent rise in yields.”
A gauge of shares in the Asia-Pacific region fell the most since the virus-induced selloff in March as benchmarks dropped more than 3% in Japan and Hong Kong.
Elsewhere, oil retreated from its the highest in more than a year as traders mulled depleting global inventories. Bitcoin tumbled more than 7% and gold extended an overnight decline.
Some key events to watch this week:
Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.
These are some of the main moves in markets:
Stocks
The Stoxx Europe 600 index dropped 1.3% by 8:16 a.m. in London.S&P 500 futures fell 0.2%.Nasdaq 100 futures slipped 0.2%.The MSCI Asia Pacific index declined 3.3%.The MSCI Emerging Markets index retreated 2.8%.
Currencies
The Bloomberg Dollar Spot Index rose 0.1% after gaining 0.6% Thursday.The euro was 0.3% lower at $1.2143.The British pound fell 0.6% to $1.3937.The Japanese yen gained 0.2% to 106.05 per dollar.
Bonds
The yield on 10-year Treasuries dipped five basis points to 1.475%.Germany’s 10-year yield dropped two basis points to -0.25%.The yield on U.K. 10-year bonds was flat at 0.78%
Commodities
West Texas Intermediate crude fell 1.2% to $62.78 a barrel.Gold fell 0.5% to $1,761 an ounce.
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