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Global bond selloff, G20 on deck, and U.S. stocks tumble. Here are some of the things people in markets are talking about.
The Name’s Bond
Fixed income didn’t live up to its name on Thursday. A global selloff in government bonds, a byproduct of central bankers' recent hawkish lurches, wreaked havoc on markets. An underwhelming French debt auction was cited as a key catalyst for the moves which spanned the world. DoubleLine's Jeffrey Gundlach says bond bears are destined to endure further damage as hedge funds dump sovereign debt and push 10-year Treasury yields "toward 3 percent" this year. An account of the European Central Bank's June meeting showed officials discussed removing their easing bias, helping push German bund yields to their highest level in 18 months.
Meaty Issues in Germany
North Korea and global trade will be in focus at this weekend's G20 Summit in Hamburg, Germany. Though U.S. President Donald Trump has said he's weighing some "pretty severe things" in response to North Korea's successful ICBM launch, Defense Secretary James Mattis cautioned that the two sides aren't near war. The meetings will feature separate confabs between Trump and Russia's Vladimir Putin as well as China's Xi Jinping, who may push for the U.S. to deal with the North Korea problem on its own. In a speech in Poland Thursday, the Trump said the western world must defeat the twin evils of terrorism and bureaucracies.
The S&P 500 Index dropped almost 1 percent Thursday, its worst day since May. A selloff in tech shares was the biggest culprit for the decline; aside from utilities, most interest rate-sensitive sectors fared poorly amid the bond rout. The near-global chorus of hawkish central bankers that's driven the recent back-up in yields could sink the stock market, too, some strategists fear. The technical charts aren't painting an encouraging picture for equities, either.
While U.S. jobs data comes out after Asian markets close, it promises to set the tone for next week's trade. Economists are calling for job growth of 178,000 after May's reading of 138,000, with the unemployment rate holding steady at 4.3 percent and average hourly earnings accelerating to a pace of 2.6 percent year-on-year. Canada's labor force survey also warrants attention ahead of next week's Bank of Canada meeting, with swaps markets currently implying a 90 percent chance of a rate hike. For the Asia Pacific region, the day's key data comes from Japan. Real labor cash earnings are forecast to moderate a tick to annual growth of 0.4 percent in May, with that month's preliminary readings of the leading and coincident indexes slated to be released later in the day.
Bad news: Asia Pacific equities are taking their cues from the U.S. selloff. S&P/ASX 200 and Nikkei 225 are trading well into negative territory as of 5:30 a.m. Tokyo time. Stocks in the region had a down day Thursday, with acute losses from energy shares.
What we’ve been reading
This is what caught our eye over the last 24 hours.
China's liquidity mystery.
The surfer who saved the world from a cyberattack.
Global warming might be speeding up.
Pakistan's "mind-boggling" rupee retreat due to a miscommunication.
Corbyn to talk Brexit with chief E.U. negotiator.
Toronto home sales tank.
Flamingo sales buoy this British fashion chain's quarterly results.