Global Bond Selloff Deepens Amid Hints at End of Stimulus – Christopher Whittall June 29, 2017 5:01 a.m. ET


Investors continued to digest messages from central banks signaling the end of easy-money policies

Federal Reserve Chairwoman Janet Yellen at a House Financial Services Committee hearing in Washington, D.C., in February. “The time is approaching when the [Federal Reserve] will no longer be the only major central bank in tightening mode,” foreign-exchange strategists at BNP Paribas said.

Federal Reserve Chairwoman Janet Yellen at a House Financial Services Committee hearing in Washington, D.C., in February. “The time is approaching when the [Federal Reserve] will no longer be the only major central bank in tightening mode,” foreign-exchange strategists at BNP Paribas said.| Photo: Aaron P. Bernstein/Bloomberg News

Global government bond prices slumped for a third straight day Thursday, while the dollar fell against several developed-market currencies, as investors continued to digest messages from central banks signaling the end of easy-money policies.

Investors dumped U.S. Treasurys and European bonds Thursday morning, sending yields on many securities to their highest levels in more than a month. Meanwhile, the euro, British pound and Canadian dollar logged further gains against the U.S. dollar after rising sharply earlier this week.

The moves follow a raft of comments from some of the world’s largest central banks pointing to a reduction of the extraordinary stimulus measures that have underpinned global markets in the years after the financial crisis.

“The time is approaching when the [Federal Reserve] will no longer be the only major central bank in tightening mode,” foreign-exchange strategists at BNP ParibasSA wrote in a note to clients Thursday.

Still, investors say the communications from central banks have at times been muddled and confusing, leaving many debating how far the current market moves can go. Global investors are still working through the implications of the change in tone from central banks.

The euro rose for a third straight day against the dollar. It was up 0.4% recently at $1.1420 — levels not seen in over a year. The British pound and the Canadian dollar rose against the buck after both notching large gains on Wednesday, up 0.4% and 0.1% respectively in early European morning trade.

The yield on the 10-year Treasury note rose to 2.245% from 2.223% on Wednesday, according to Tradeweb, on track for its highest close since late May. Eurozone and U.K. government bond yields also climbed.

The market moves started on Tuesday when European Central Bank President Mario Draghi acknowledged a “strengthening and broadening” economic recovery in the eurozone.

Article continues:

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s