Stocks hit record as US yields hold above recent lows

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  • US stock indices advance, European stocks close at record high
  • US CPI, Fed Powell on deck this week
  • ECB announces policy guidelines will be changed at next meeting

NEW YORK, July 12 (Reuters) – A gauge of global equities hit an intraday high on Monday and US Treasury yields held above five-month lows touched last week as investors looked for signs of whether the Delta variant of the coronavirus could hurt global growth.

Concerns about a slowing economic recovery due to increasing cases of the variant around the world helped send the benchmark 10-year US Treasury note yield to a five-month low of 1.25 % last week. The yield had reached 1.78% in March as growth expectations accelerated as vaccination rates increased.

The World Health Organization has warned that the Delta variant is becoming dominant and that many countries have yet to receive enough doses of the vaccine to keep their health workers safe. Read more

Analysts also cited a lack of supply for lower yields. Yields were little changed after the Treasury sold $ 58 billion in three-year notes and $ 38 billion in 10-year notes, with a sale of $ 24 billion in 30-year bonds slated for Tuesday.

The earnings season is expected to start this week, along with key consumer and producer price inflation data, as well as comments from Fed Chairman Jerome Powell, which should help investors gain insight prospects for economic growth and central bank policy. Read more

“The earnings season is going to be warmly welcomed as an opportunity to confirm existing biases,” warned Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.

“Even if the forecast is not as optimistic as the more optimistic had hoped, everything will become more streamlined.”

Benchmark 10-year bonds last returned 1.3611%, down from 1.356% on Friday night.

Equity gains on Wall Street were modest, with financials (.SPSY) the best performing S&P sector of the session ahead of results from JPMorgan Chase (JPM.N), Goldman Sachs (.GS.N) and Bank of America Tuesday.

The Dow Jones Industrial Average (.DJI) rose 114.17 points, or 0.33%, to 34,984.33, the S&P 500 (.SPX) gained 14.31 points, or 0.33%, to 4,383.86 and the Nasdaq Composite (.IXIC) added 24.71 points, or 0.17%, to 14,726.63.

European stocks also rose to close at a record high 460.83. The pan-European STOXX 600 index (.STOXX) rose 0.69% and MSCI’s global stock gauge (.MIWD00000PUS) gained 0.49% after hitting a record high of 727.13.

Powell’s testimony later this week will be followed closely after the People’s Bank of China decided on Friday evening to release $ 154 billion for banks to support economic recovery while the European Central Bank said it would discuss a change from its forward-looking guidance to policy guidance at next week’s meeting. Read more

Concerns about slowing economic growth weighed on crude prices, outweighing the possibility of a tight supply after talks between producers ended last week. Read more

US crude recently fell 0.89% to $ 73.90 a barrel and Brent was at $ 75.05, down 0.66% on the day.

The safe haven dollar edged up amid concerns about the pandemic and its potential to thwart growth. Read more

The dollar index rose 0.12%, the euro down 0.13% to $ 1.1857.

Additional reporting by Noel Randewich; Editing by Dan Grebler and Sonya Hepinstall

Our Standards: Thomson Reuters Trust Principles.

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