Global Bonds Selloff Deepened

Oct 29, 2016, 01:54
Global Bonds Selloff Deepened

The markets awaited the third quarter USA gross domestic product data due later in the session after Thursday's data enhanced the outlook for the world's largest economy.In commodities, crude oil dipped slightly after making strong gains the previous day, when commitments from Gulf OPEC members to cut production assuaged some lingering doubts in the market about cooperation from other producers. But the probability of a rise in December, after the U.S. presidential election, is 72 per cent.

South Korea's Kospi shed 0.3 percent and Australian stocks fell 0.2 percent.

Global bonds yields continued to rise and bonds selloff deepened as investors are expecting Central banks' simulation come to an end. Hong Kong's Hang Seng lost 0.4 percent while Japan's Nikkei gained 0.7 percent on a weaker yen.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose 4-1/2 basis points to 1.206 percent, the yield on long-term 30-year note climbed 4 basis points to 1.868 percent and the yield on short-term 2-year bond bounced 1-1/2 basis points to 0.575 percent by 12:40 GMT.

A sell-off in Gilts had led the way on Thursday as strong third quarter United Kingdom growth data doused expectations for monetary easing by the Bank of England.

USA two-year note yields were at 0.888 percent (), up from Thursday's 0.884 percent.

Wall Street stocks finished lower Thursday amid concerns about higher bond yields and retailers retreating after a trade group said the U.S. presidential campaign is crimping shopping.

Europe's index of leading 300 shares was down 1 per cent in early trade at 1,337 points, Germany's DAX was down 1 per cent and Britain's FTSE 100 was down 0.6 per cent.

"105 (yen) was both a psychological and technical point, and it broke ahead of US GDP later today", said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo. The yield on the two-year note TMUBMUSD02Y, -1.72% fell 0.8 basis point to 0.876%.

Thursday's selloff was worsened not just by expectations of higher interest rates in the US, but also decreased central bank support in Europe and Japan.

[GVD/EUR] The euro was flat at $1.0897 EUR=, with the downturn versus the dollar not as sharp compared to the Japanese yen thanks to the big rise in euro zone debt yields.The dollar index.DXY was flat at 98.912 after rising about 0.2 percent on Thursday.

U.S. 30-year bonds were down more than a point in price to yield 2.605 per cent, up from Wednesday's 2.537 per cent. Thirty-year yields earlier hit a five-month peak of 2.631 per cent. It was on track to gain about 0.3 per cent this week, having struck a nine-month peak along the way. In recent weeks, market participants have been pricing in more than a 70 percent chance that the USA central bank would hike interest rates in December, according to CME Group's FedWatch program.

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