Treasuries Resume Fed Gains as Stock Rally Falters: Markets Wrap

Updated on
  • U.S. dollar posts biggest weekly slide since July 2016
  • Most tranquil markets in two years propelling bolder bets

Asian Stocks Eye Second Best Week in 2017

Treasuries posted a weekly advance spurred by the Federal Reserve’s signal it’s in no rush to lift rates. Emerging-market stocks extended their best week in eight months, while U.S. equities and the dollar fell.

The yield on the 10-year Treasury note slipped below 2.50 percent, resuming a slide sparked by a dovish tone from the U.S. central bank. The S&P 500 Index pared a weekly gain, and developing-nation shares rose a sixth day. Oil prices posted their first weekly advance this month after Saudi Arabia’s Energy Minister told Bloomberg News the kingdom may prolong production cuts. U.S equity volatility rose amid a quarterly event known as quadruple witching, when futures and options contracts on indexes and individual stocks expire.

While momentum faded on Friday, global stocks recorded the best week since January after the Fed raised its benchmark lending rate a quarter point without accelerating the timetable for future hikes. U.S. policy makers’ reticence to speed up tightening is prompting investors to ditch the dollar in favor of higher-yielding currencies, while the most tranquil markets in two years are spurring a hunt for returns in riskier landscapes. 

Volatility is extending its retreat after a series of central bank policy decisions passed without incident and the Dutch election results eased concern about the rise of European populism. JPMorgan Chase & Co.’s G7 Volatility Index fell 7.5 percent Thursday to the lowest since November 2014. One-month implied volatility for the Euro Stoxx 50 Index has dropped this week and trades near its lowest level since July of the same year. 

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Here are the main moves in markets:

Stocks

  • The S&P 500 fell 0.1 percent to 2,378.25 at 4 p.m. in New York. The index is up 0.2 percent in the week.
  • The Stoxx Europe 600 Index ended 0.2 percent higher as it notched a weekly gain of 1.4 percent.
  • The MSCI Emerging Markets Index rose 0.3 percent, bringing its rally for the week to 4.3 percent, outpacing a 1.3 percent advance for the MSCI All-Country World Index.

Currencies

  • The Bloomberg Dollar Spot Index slipped 0.1 percent, pushing its rout in the week to 1.3 percent, most since July 2016.
  • The euro fell 0.3 percent versus the dollar to $1.0737, while the yen traded at 112.68.

Commodities

  • West Texas Intermediate gained less than 0.1 percent to settle at $48.78 a barrel and Brent was little changed at $51.76.
  • Gold posted its first weekly advance this month.

Bonds

  • The yield on 10-year U.S. Treasuries fell four basis points to 2.4987 percent.
  • French yields for bonds of the same duration climbed two basis points to 1.109 percent, while German bunds fell one basis point to 0.43 percent.

— With assistance by Stephen Kirkland, and Cecile Vannucci

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