Bond Investors Catch Up With Fed’s Plans


NEW YORK, Oct 5 (Reuters) - Major world stock markets sank for a second straight day on Friday after strong numbers signaled a continued tightening of the labor market and increased inflation pressures, while Treasury yields rose again to multi-year highs. The Labor Department's report also showed a steady rise in wages, suggesting modest inflation, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rate increases.

The pan-European STOXX 600 benchmark index was down 0.3 per cent by 0738 GMT.

The Dow .dji rose 0.2 percent, while the S&P 500 .spx gained 0.07 percent and the Nasdaq .ixic 0.32 percent. The dollar index fell 0.09 percent. "I think the market moves in the bonds this week side-swiped a lot of individuals".

On Wednesday, a USA government bond index compiled by Bank of America Merrill Lynch posted its biggest daily price loss since March 2017 on economic reports about the US sevice sector and private payrolls. That piled more pressure on USA stocks, which are trading near record-high levels, raising concerns about valuations with the earnings season just around the corner. For a euro-based buyer of Treasuries, the cost to hedge would entail paying the three-month London interbank offered rate for dollars (currently about 2.41 percent), receiving their local Libor (minus 0.35 percent) and the basis (0.39 percent). This time, it was a positive private payrolls report that caused benchmark Treasury yields to reach decade highs with the 10-year note hitting 3.149 as of 2:00 p.m. ET-its highest since July 2011.

MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.7 percent in response, with South Korea, the Philippines, Indonesia and Taiwan all down.

The groundswell of economic optimism swept the US dollar to a six-week high on a basket of currencies and it was last trading up 0.34 percent at 96.086.

Analizarán acuerdo con equipo de AMLO -Reforma
A su vez, el coordinador de Morena en el Senado, Ricardo Monreal , explicó que ese encuentro no tiene carácter de comparecencia y reconoció la actitud y apertura del equipo negociador del USMCA y de quienes acompañaron la misma.

In early European trade London fell 0.3 percent, Paris lost 0.4 percent and Frankfurt eased 0.1 percent.

Oil prices have reached four-year peaks as the market focused on upcoming US sanctions on Iran while shrugging off the year's largest weekly build in USA crude stockpiles.

At around four-year highs, oil prices have triggered concerns about demand as U.S. President Donald Trump has blamed the Organization of the Petroleum Exporting Countries for rising gasoline prices for American consumers.

US crude futures settled at $74.34 per barrel, up 0.001 percent, and Brent settled at $84.16, down 0.50 percent for the day.

Prices have eased slightly after Saudi Arabia and Russian Federation said they would raise output to at least partly make up for expected disruptions from Iran, OPEC's third-largest producer, due to the US sanctions that take effect on November 4.

Emerging market stocks lost 1.01 percent, putting them on track to close at a 17-month low.