The 10-year Treasury yield fell to 3.65% on the Thanksgiving holiday yield, its lowest level since Oct. 5, after hitting 4.34% in mid-October. Germany’s 10-year yield, the main index for the eurozone, settled at 1.91%, far from a seven-week low hit the day before. [US/] [GVD/EUR]
The European STOXX 600 was little changed on Friday and is heading for a weekly gain of 1.5%, its sixth consecutive weekly percentage gain, after being battered earlier this year.
“The correction affected all major asset classes except the dollar and hard commodities, and now it’s a major reversal,” said Olivier Marciotte, head of investments for multi-asset at Unigestion.
“The pace of the (central bank’s) tightening cycle was unprecedented and created this shock, and now that that limiting factor has leveled off, it’s creating a boost for all asset classes.”
The US Federal Reserve has raised interest rates significantly this year, but a “significant majority” of Fed policymakers agreed that “it will likely be appropriate soon” to slow the pace of rate hikes. interest rate, according to the minutes of their last meeting Wednesday.
Expectations of an imminent peak in interest rates were reinforced earlier this month when US inflation data for October came in lower than expected.
Futures markets show that investors now see US interest rates peaking almost above 5% in May, and they estimate about two-thirds the chance that the Fed will slow its hike by half a point on December 14 after a series of 75 basis point increases.
European equity investors see positive economic data as reason to buy, encouraged by Wednesday’s data which showed Germany’s economy grew by 0.4% in the quarter and 1.3% in the quarter – slightly above expectations – thanks to an increase in household spending.
S&P 500 futures rose 0.15%, although trading is likely to ease after the Thanksgiving holiday on Thursday.
Currency markets also reflect the recent improvement in risk sentiment, with the safe-haven dollar expected to decline weekly against most G10 currencies, including the euro, pound and Japanese yen. [FRX/] GBP = D3>
The British pound was one of the best performing currencies and hit a three-and-a-half-month high of $1.2153 on Thursday.
Asian stocks were struggling more than their European peers after China reported another record high in daily COVID infections, as cities across the country imposed local lockdowns, mass testing and other restrictions, stifling fears. .
“Investors have cause for concern,” said Rob Carnell, an economist at ING. “China does not have a sufficient health network to be able to handle a full-blown epidemic with so many people infected.”
Mr Carnell added: “Living in the medium term with COVID is a sweet dream, but how do you get there?”
Hong Kong’s Hang Seng fell 0.5%, led by a 2.29% decline in the technology sector, but local Chinese firms rose 0.5%, boosted by new government measures intended to support a downturn in the property market.
The real estate development stock index jumped 6.8%.
After the market closed, China said it would reduce the amount of cash banks must hold as reserves, freeing up about 500 billion yuan ($69.8 billion) to prop up the ailing economy.
Oil prices rose sharply, reversing declines from earlier in the week, with Brent crude futures rising 1.58% to $86.69 a barrel and US crude oil futures rising 2.13% to 79.6%. [O/R]
Gold rose 0.2% near $1,758 an ounce, amid dollar weakness. [GOL/]