US Yields Jump to 3-Year Highs, Stocks Fall on CPI Outlook

A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., April 11, 2022. REUTERS/Andrew Kelly

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NEW YORK, April 11 (Reuters) – Global stock markets fell on Monday, pushed lower by tech stocks in Europe and Wall Street as Treasury yields eased the recovering economy.

The euro rose against the dollar to snap a seven-day losing streak as the single currency rallied after French leader Emmanuel Macron defeated far-right challenger Marine Le Pen in the first round of France’s presidential election. on Sunday. read more

The dollar held just below near two-year highs against a basket of currencies and strengthened against the Japanese yen, up 0.88%, and against the commodity currencies Canadian dollars, Australian and New Zealand.

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The benchmark 10-year Treasury yield rose more than 7 basis points to 2.793%, the highest level since January 2019.

Yields have risen in anticipation of Fed rate hikes, which Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management, expects to be 50 basis points at each of the next three policy meetings. of the Fed

“The Fed is going to move aggressively. The market has priced it in appropriately,” Mullarkey said.

“They don’t want to be a problem in the midterms,” ​​Mullarkey added, referring to the November election that will determine whether Republicans can wrest control from President Joe Biden’s Democrats in the US Senate and House of Representatives. “They also don’t want to be in a position where they don’t have inflation under control.”

Economists polled by Reuters forecast the US consumer price index (CPI) on Tuesday to post an 8.4% year-on-year rise in March. Separately, they also saw the probability of a recession next year at 40%. read more

Tech stocks, which have been supported by record-low interest rates, fell 2% in Europe. (.SX8P) and 2.6% on Wall Street (.SPLRCT).

MSCI Stock Indicator Worldwide (.MIWD00000PUS) closed down 1.33% and the pan-European STOXX 600 index (.STOXX) it fell 0.59% due to the drop in regional stock markets, with the exception of France’s CAC 40.

On Wall Street, the Dow Jones Industrial Average (.DJI) fell 1.19%, the S&P 500 (.SPX) lost 1.69% and the Nasdaq Composite (.IXIC) fell 2.18%. All 11 sectors of the S&P 500 fell.

Volatility gripped leading French companies at the prospect of a close Macron-Le Pen race in the final round of voting. French assets have underperformed as markets fret over Le Pen’s agenda of protectionism, tax cuts and nationalisation.

The CAC 40 Index (.fchi)which is down 1.5% so far in April while the STOXX 600 is up around 0.4%, it closed up 0.12%.

“I don’t expect French stock markets to recover until we have the second round, we expect a lot of volatility and range trading,” said Mathieu Racheter, director of equity strategy at Julius Baer. “It’s really a close decision in the second round.”

Overnight in Asia, MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) fell 1.6% and the Nikkei 225 (.N225) in Tokyo it fell 0.61%.

Oil prices fell $4 a barrel, with Brent slipping below $100 on plans to release record crude volumes from strategic reserves and ongoing COVID-19 lockdowns in China.

US crude futures fell $3.97 to settle at $94.29 a barrel, while Brent crude fell $4.30 to settle at $98.48.

Palladium steadied after rising as much as 5% on supply concerns following a recent halt in trading for the metal from Russia at the London metals hub, while gold was buoyed by inflation fears.

US gold futures closed 0.1% higher at $1,948.20 an ounce.

Bitcoin fell 5.66% to $39,748.60.

China’s inflation figures surprised on the upside on Monday, although they were still relatively modest at 1.5% year-on-year in March. read more

But even so, China’s 10-year government bond yields fell below US Treasury yields for the first time in 12 years on Monday.

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Reporting from Herbert Lash, additional reporting from Samuel Indyk and Elizabeth Howcroft in London, Sruthi Shankar in Bengaluru; Edited by Philippa Fletcher, Angus MacSwan, Will Dunham and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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