Yields, stocks slip as yen rises on safe-haven bid
NEW YORK (Reuters) – US Treasury yields fell to three-anda-half-month lows on Thursday and the yen rose as falling oil and stock prices increased demand for low-risk assets.
An index of world equity markets snapped a five-day gaining streak and oil prices dipped as traders took profits after three sessions of gains.
The yen, which investors prefer in times of market uncertainty, reached a three-year peak against the euro and fiveweek high versus the US dollar.
“It’s generally a cautious mood today,” said Eric Viloria, a currency strategist at Wells Fargo Securities in New York. “You have stocks lower and yields lower.”
The dollar index, which tracks the greenback against the euro, yen and four other currencies, rebounded from five-week lows set on Wednesday. It was up 0.34 percent at 93.905 in early afternoon trading.
The greenback’s gains were supported by an unexpected drop in US jobless claims and a stronger-than-expected rise in wholesale sales in April, soothing some worries about the US economy decelerating in the second quarter.
Oil, which earlier hit a 2016 high helped by supply worries, was pressured by profit taking and the firmer dollar. A stronger dollar makes oil dearer for holders of other currencies.
The MSCI world equity index of shares in 45 nations was down 0.75%. The index pulled back from a six-week high hit on Wednesday, having rallied on buoyant crude-oil prices and an encouraging assessment of the economy by Fed Chairwoman Janet Yellen on Monday.
On Wall Street, stocks fell after three days of gains, weighed by financials and energy companies.
The Dow Jones Industrial Average fell 70.23 points, or 0.39%, to 17,934.82, the S&P 500 lost 9.33 points, or 0.44%, to 2,109.79, and the Nasdaq Composite dropped 20.83 points, or 0.42%, to 4,953.81.
Europe’s broad FTSEurofirst 300 index declined 0.95% to 1,340.08, weighed down by weakness among commodities-related stocks.
Earlier, Japan’s Nikkei fell nearly 1%, hurt by the stronger yen. Financials and banking stocks led the losses amid lower bond yields.
In the bond market, US Treasury yields dipped as falling oil and stock prices increased demand for safe-haven debt amid concerns about global growth.
British and German sovereign-debt yields fell to record lows, driven by concerns about Britain’s referendum on European Union membership later this month and the European Central Bank’s commencement of its corporate-bond purchase program.
That has further increased the attractiveness of Treasuries, which offer far higher yields than European, Japanese and other major sovereign bonds, as the US economy shows greater strength than those nations.
“It’s a demand for securities and yield,” said Tom Tucci, the head of Treasuries trading at CIBC in New York.
Benchmark US 10-year notes gained 1/32 in price to yield 1.671%, the lowest since February 24.
Brent crude was down 0.74% at $52.12 a barrel, while US crude was down 0.92% at $50.76 per barrel.
The firmer dollar knocked copper to its lowest in nearly four months. Three-month copper on the London Metal Exchange tumbled 2% to a low of $4,485.50 a ton.
Spot gold hit a three-week high and was up 0.68% to $1,270.36 an ounce.