By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Anxieties in long bonds continued to unsettle world markets on Wednesday, with 30-year government borrowing rates in Japan, Europe and the United States all spiking. The U.S. long bond touched 5% for the first time since mid-July.
A mix a concerns about rising public debt piles, the European budget season, Federal Reserve independence, the week’s U.S. jobs numbers and even another potential round of U.S. debt ceiling battles all appear to have conspired to jar the back end of the bond market.
Meanwhile, Wall Street stocks had another bad day, with a 0.7% drop in the S&P 500. But futures perked up on Wednesday as Google-parent Alphabet surged 6% premarket after a Federal judge spared it from a forced breakup in a pivotal antitrust case over its Chrome browser.
* Japan’s 30-year government bond yield hit a record high, Germany’s 30-year hit a 14-year high, French 30-year debt hovered near 17-year highs and Britain’s 30-year gilt clocked its highest since 1998. Societe Generale said it expects more than 100 billion euros in European bond issuance this month and next. UK finance minister Rachel Reeves said on Wednesday that she would deliver her annual budget on November 26, with a focus on keeping a “tight grip” on public spending. Bonds rallied later, however, after a retreat in crude oil prices when Reuters reported OPEC would this weekend consider another output hike.
* Gold prices continued to push further into record territory above $3,500, with global military and geopolitical tensions adding to debt market disturbances and long-term inflation worries. Chinese President Xi Jinping said the world faced a choice between peace or war at a massive military parade in Beijing, flanked by Russia’s Vladimir Putin and North Korea’s Kim Jong Un in an unprecedented show of force. The dollar slipped back from Tuesday’s highs against the euro, yen and sterling – with Friday’s critical August U.S. jobs release preceded today by the July job openings number.
* Alphabet’s post-bell surge on the Chrome antitrust ruling leads the single stock moves. Investors cheered the judge’s ruling, which also allows Google to keep making lucrative payments to Apple that antitrust enforcers said froze out search rivals. Apple shares rose 3% out of hours. On Tuesday, shares of Kraft Heinz dropped 7% after the company said it will split into two companies, one focused on groceries and the other on sauces and spreads. With the food sector seemingly in play, shares of PepsiCo gained 1% after Elliott Management disclosed a $4 billion stake in the beverages company.
Today’s Market Minute
* Chinese President Xi Jinping warned the world was facing a choice between peace or war at a massive military parade in Beijing on Wednesday, flanked by Russia’s Vladimir Putin and North Korea’s Kim Jong Un in an unprecedented show of force.
* Kraft Heinz (KHC.O) will split into two companies, one focused on groceries and the other on sauces and spreads, it said on Tuesday, dismantling a packaged goods giant that never achieved the growth expected when it was formed a decade ago.
* Holiday spending by U.S. consumers is set for its steepest drop since the pandemic as shoppers — particularly Gen Z — pull back amid economic uncertainty, a PricewaterhouseCoopers survey showed.
* Data going back decades shows that, on average, September is the worst month for U.S. stocks. So should investors brace for another bumpy ride this year? Almost certainly, writes ROI markets columnist Jamie McGeever, and not just because of the “September effect.”
* China’s net imports of refined copper dropped to a one-year low in July as the world’s largest buyer found itself in competition with the U.S. for metal. Find out more in the latest piece from ROI columnist Andy Home.
Chart of the day
Reuters surveyed over 100 foreign exchange forecasters between August 29 and September 3 on U.S. dollar rates versus major currencies as well as the Chinese yuan, Russian rouble, Indian rupee, Brazilian real, Turkish lira and many others. The median forecast over the next year is for a 7.4% further rise in Japan’s yen and 2.5% rise of the euro.
Today’s events to watch
* U.S. July JOLTS job openings data (10:00 AM EDT), July factory goods orders (10:00 AM EDT); Canada Q2 labor productivity
* Federal Reserve releases Beige Book on economic conditions (2:00 PM EDT) Minneapolis Fed President Neel Kashkari and St. Louis Fed President Alberto Musalem both speak
* U.S. corporate earnings: Salesforce, Dollar Tree, Campbell’s, Hewlett Packard
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(The opinions expressed here are those of the author, a columnist for Reuters)
(by Mike Dolan; editing by Philippa Fletcher)
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