World stocks gain again, US bonds stead­ier

The Pak Banker - - International3 -

LONDON: World stocks ratch­eted higher on Thurs­day, adding to De­cem­ber's rally, and U.S. Trea­suries stead­ied fol­low­ing their re­cent sharp sell off.

The dol­lar also clawed back some losses from the past cou­ple of ses­sions.

A com­bi­na­tion of ris­ing op­ti­mism about the U.S. econ­omy, in­clud­ing over a pro­posed ex­ten­sion of tax cuts, and con­cerns about the deficit that those mea­sures would worsen, prompted a sharp spike in Trea­sury yields on Wed­nes­day as in­vestors dumped the bonds.

Thurs­day, how­ever, saw a cool­ing of the sell-off ar­dor.

"My hunch is that we are near a sell­ing cli­max in U.S. Trea­suries. Such a feel­ing is also in the mar­ket, damp­en­ing the dol­lar now," said Koichi Yoshikawa, head of forex trad­ing at BNP Paribas in Tokyo.

The yield on 10-tear U.S. Trea­suries was around 3.25 per­cent in early Euro­pean trad­ing, down around 2 ba­sis points but still around 90 ba­sis points above this year's low hit in late Septem­ber.

At the Reuters 2011 In­vest­ment Out­look Sum­mit held in New York and London this week, lead­ing in­vestors in­di­cated they wanted to avoid bench­mark govern­ment bonds be­cause their low yields were un­sus­tain­able.

"We are go­ing to have to get used to ris­ing long-term yields. How else are you go­ing to get the long-term sav­ings re­turns you need?" An­dreas Uter­mann, chief in­vest­ment of­fi­cer of fund firm RCM, said at the sum­mit.

The dol­lar, which has risen on prospects of higher yields from U.S. as­sets, was down a quar­ter of a per­cent against a bas­ket of ma­jor cur­ren­cies on Thurs­day (.DXY), es­sen­tially track­ing the re­cov­ery-fromWed­nes­day mood. Euro zone debt also gained slightly and ten­sion sur­round­ing pe­riph­eral euro zone debt were muted. In­vestors, by con­trast, have be­come more bullish about eq­ui­ties, driv­ing world stocks as mea­sured by MSCI (.MIWD00000PUS) up nearly three per­cent this month. -Ap

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.