Dollar Rebounds, Bonds Rally as Federal Reserve Spurs Caution
The government bond yields have retreated as European stocks, and U.S. equity futures fell on Thursday. Investors have digested a dovish move by the policymakers in the United States. After Wednesday’s loss, the dollar rebounded.
The yield on ten-year Treasuries has extended slightly from the previous day as rates dropped across Europe. Gold went up as economists and investors remained cautious with the upcoming Federal Reserve meeting. Futures for three of the main U.S. share gauges point to declines at the opening as Biogen, and a pharma giant plunged during early trading after it stopped its Alzheimer’s drug trial. The Stoxx Europe 600 also dropped amidst mixed national benchmarks. Asian equities resisted the trend as the regional index moved forward as Hong Kong Shares dropped slightly and the Japanese markets closed down for a holiday.
The monetary policies in the United States seem to be supportive for risk takers at first glance, many of them have already reported strong gains this year with a dovish Fed priced in probably. The extent of the Federal Reserve’s tilt has raised concerns globally that the outlook for growth might be weaker than expected. Worries about global expansions have also caused treasury yields to drop to their lowest level in the past year.
The pound has dropped with the building pressure on the U.K. Prime Minister to gather a majority for the Brexit deal. Theresa May is at loggerheads with the EU over an extension for the March 29 deadline for the country to exit from the bloc, increasing the chances of a no-deal departure. The Norwegian krone went up as the Norwegian central bank raised rates, and the interest rates were kept rock bottom by Swiss National Bank.
The yuan went up briefly in the Asia currency markets as China’s central bank set the daily fixing at its highest since July. The Australian and New Zealand dollars went up on solid economic data. Hong Kong’s de facto central bank bought the local dollar after the exchange rate dropped to the weak end of the trading band against the U.S. dollar.
The futures on the S&P 500 Index went down 0.4 percent at 7:36 am New York time.
The Stoxx Europe 600 Index went down 0.3 percent which is the lowest this week.
The U.K.’s FTSE 100 Index went up 0.5 percent. The MSCI Emerging Market Index went up 0.3 percent to the highest point in the last seven months.