Fears of falling bond prices that gripped the market eased on Monday, as European stocks and US stock futures surged as bond yields fell.
The surge in bond yields put stock markets under pressure last week, with the technology-heavy Nasdaq Composite COMP,
lose almost 5%. Rising returns make the relative valuation of equities look worse. Revenues move in the opposite direction of prices.
The return on the US 10-year Treasury TMUBMUSD10Y,
was 1.43%, against a drop of 1.55% last week.
The Reserve Bank of Australia doubled its daily bond purchases to A $ 4 billion, bringing returns on the Aussie 10-year TMBMKAU-10Y,
sharply lower. Comments from Federal Reserve officials last week indicated that there is no point in stepping up purchases of US Treasuries.
“I have no doubt that central banks will eventually lean quite hard against a sustained rise in interest rates. They simply cannot afford to see it happen with such a high debt burden, ”said Jim Reid, a strategist at Deutsche Bank. So far, however, Fed officials have been largely relaxed about the recent moves, suggesting that it reflects more positive economic growth. But because it all went so fast last week, they’ve had the chance to regroup and align their message for this week. “
The relief on the tariff front boosted equities with the Stoxx Europe 600 SXXP,
1.6% gain after rally in Asian NIK stocks,
‘at night.
Futures on the Dow Jones Industrial Average YM00,
rose more than 300 points.
British homebuilders took a leap, reports say the government will subsidize mortgages with 5% down payments, a move intended to encourage home ownership in a country with average house prices of £ 251,500 and £ 496,066 in London. Persimmon PSN,
rose 6% and Taylor Wimpey TW,
5% added.
British Chancellor Rishi Sunak delivers the budget on Wednesday.