Bonds slip back amid rising rate cuts doubts

Stocks and bonds retreated as traders pause after November’s blockbluster rally and debate the case for interest rate cuts. Bitcoin surged past $41,000, while gold briefly touched an all time high.

The 10-year Treasury yield added four basis points to 4.24%, while European stocks and U.S. futures posted modest losses. Gold surpassed $2,130 an ounce before giving up gains for the day.

A slew of economic reports this week are expected to shed light on the state of the U.S. labor market and whether markets are prematurely excited that softer economic conditions can open the door to Federal Reserve rate cuts.

“Rates seem to price more the positive news than not,” Mauro Valle, head of fixed income at Generali Investments Partners, wrote in a note. “It’s unlikely to see another movement for lower yields in the final weeks of the year.”

The latest reading on US job openings for October is due to be published Tuesday, followed by ADP’s National Employment Report on Wednesday and non-farm payrolls on Friday.

Gold slid from its intraday high, trading around $2,063 an ounce. Bitcoin climbed past the $41,000 level to the highest since April 2022. 

“As long as those rate conditions stay where they are, gold will remain supported over the next three to four weeks,” Eric Robertsen, global head of research and chief strategist at Standard Chartered Bank, said on Bloomberg Television.

Indian equities were headed for a fresh record after Prime Minister Narendra Modi’s victories in three key state elections boosted expectations of policy continuity.

Shares of distressed developer China Evergrande Group surged as much as 22% after a Hong Kong court again postponed a decision on whether the world’s most-indebted property developer should be wound up.

Key events this week:

• Riskbank November meeting minutes released, Monday
• US factory orders, durable goods, Monday
• Reserve Bank of Australia rate decision, Tuesday
• Japan’s Tokyo CPI, Tuesday
• China Caixin services PMI, Tuesday
• South Korea CPI, GDP, Tuesday
• Eurozone PMIs, Tuesday
• Australia GDP, Wednesday
• Eurozone retail sales, Wednesday
• Bank of Canada rate decision, Wednesday
• China trade, FX reserves, Thursday
• Eurozone GDP, Thursday
• Germany industrial production, Thursday
• US wholesale inventories, initial jobless claims, Thursday
• Japan household spending, GDP, Friday
• US non-farm payrolls, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:  

Stocks

• The Stoxx Europe 600 fell 0.2% as of 9:45 a.m. London time
• S&P 500 futures fell 0.3%
• Nasdaq 100 futures fell 0.3%
• Futures on the Dow Jones Industrial Average fell 0.2%
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was little changed at $1.0878
• The Japanese yen rose 0.1% to 146.66 per dollar
• The offshore yuan fell 0.2% to 7.1401 per dollar
• The British pound fell 0.2% to $1.2680

Cryptocurrencies

• Bitcoin rose 4.9% to $41,687.05
• Ether rose 3.5% to $2,259.54

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.24%
• Germany’s 10-year yield was little changed at 2.37%
• Britain’s 10-year yield advanced four basis points to 4.18%

Commodities

• Brent crude fell 1.3% to $77.86 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

Related Topics: Bonds