European and U.S. yields remained elevated after a sell-off in debt this week stoked by a number of central banks stepping up talk of tighter policy conditions. The slump in bonds, with reverberations in stocks, earlier spread to Asia.
With bearish comments from investors Jeffrey Gundlach and Ray Dalio adding to the impression of a potential sea change for bonds, yields rose across Asia — spurring the BOJ to reinforce its cap on 10-year rates. German 10-year yields were little changed in early trading Friday after after hitting 18-month highs Thursday. Treasuries also slipped further ahead of the U.S. jobs report for June that may give fresh impetus to bets on the Federal Reserve’s policy outlook.
European and U.S. stock futures were little changed. Asian equities retreated after the S&P 500 Index fell the most since May on Thursday, while gold and oil fell. The yen dropped to the lowest since mid-May after the BOJ’s maneuver.
“Shares are vulnerable to a further short-term setback as we go through the seasonally weak September quarter with the backup in bond yields on central bank exit talk looking like it has further go,” said Shane Oliver, Sydney-based global strategist at AMP Capital Investors Ltd., which manages about $120 billion.
While ADP Research Institute data showed companies adding fewer workers to U.S. payrolls in June than the prior month, a gauge of surprises from economic data this week staged its biggest rebound since March. Uncertainty surrounding U.S. government policy may be holding back economic growth because of its negative impact on business investment, Federal Reserve Vice Chairman Stanley Fischer said.
In Japan, the BOJ didn’t end up purchasing bonds after declaring a snap fixed-rate debt purchase operation. The announcement underscored how while European and U.S. central banks are discussing exit strategies, the BOJ intends to remain on an accommodative course for some time.
Here’s what’s coming up:
The G-20 summit in Hamburg starts Friday. U.S. President Donald Trump is expected to hold his first meeting with Russia’s Vladimir Putin as well as meet his Chinese counterpart Xi Jinping.
Friday will also see the U.S. Labor Department report official jobs figures. American employers probably added around 175,000 workers in June and wage growth is expected to have strengthened, consistent with a solid labor market, economists project.
A Fed monetary policy report is due to be presented to Congress ahead of Chair Janet Yellen’s testimony next week.
Here are the main moves in markets:
German 10-year yields were at 0.561 percent as of 8:37 a.m. in Frankfurt after climbing 9 basis points on Thursday.
Australian 10-year yields rose 9 basis points to 2.73 percent, advancing for the eighth time in 10 sessions.
Japan 10-year yields fell less than one basis point, to 0.088 percent The central bank offered to buy debt with maturities of more than five years to 10 years, after yields on its benchmark 10-year securities more than doubled in the past week.
The yield on 10-year Treasuries added 1 basis point to 2.38 percent, after climbing four basis points on Thursday.
Futures on the Euro Stoxx 50 index were flat, and those on the FTSE 100 were down 0.1 percent. The Stoxx Europe 600 index on Thursday had slumped 0.7 percent.
The MSCI Asia Pacific Index declined 0.6 percent, for its biggest weekly loss since early March. Japan’s Topix index slipped 0.5 percent, its first weekly loss in a month. Australia’s S&P/ASX 200 Index lost 1 percent. South Korea’s Kospi dropped 0.3 percent.
Hong Kong’s Hang Seng fell 0.3 percent and the Hang Seng China Enterprises Index lost 0.5 percent.
Futures on the S&P 500 Index added less than 0.1 percent. The underlying gauge slid 0.9 percent on Thursday, closing below its average price for the past 50 days.
The yen dropped 0.4 percent to 113.72 per dollar, reversing an earlier gain of 0.1 percent. The currency is down 1.2 percent for the week, heading for the biggest drop since the end of April.
The Bloomberg Dollar Spot Index rose 0.1 percent after dropping 0.3 percent on Thursday.
The euro declined less than 0.1 percent after jumping 0.6 percent in the previous session, while the pound was little changed at $1.2962.
West Texas Intermediate tumbled 1.3 percent to $44.93 a barrel, more than erasing Thursday’s 0.9 percent gain. Oil is down 2.4 percent for the week, after jumping 7 percent last week to stem a rout that sent crude into a bear market.
Gold slipped 0.3 percent to 1,221.96 an ounce. The precious metal is down 1.6 percent for the week, its worst performance since early May.