The increase in U.S. Treasury yields continued on Tuesday, with the benchmark rate turning higher to once again edge toward 3 percent. Stocks in Europe nudged upward following gains for most Asian markets as the earnings season gathered pace.
The yield on 10-year U.S. notes climbed as the securities reversed an earlier advance, while the dollar maintained Monday gains that sent it to the highest level since January. The Stoxx Europe 600 Index eked out a second day rising as traders assessed a mixed bag of corporate results, while U.S. equity futures posted a more solid jump. The yen retreated, helping spur Japan’s Topix index to the highest in almost two months, and Chinese shares rallied on signs the government may ease off tightening measures if warranted.
Investors are weighing the implications of climbing bond yields that have been spurred in part by higher commodity prices and concern surrounding their inflationary impact on the wider economy. But volatility in interest-rate markets remains low and equity price swings are well off the highs seen earlier this year, indicating investors believe rising borrowing costs may not be enough to cause outsized pain to equities -- for now.
“For us it’s more the reasons why we’re seeing the move: better growth outlook, a little bit more inflation and faster rate hikes being priced in by the market,” Kerry Craig, Melbourne-based global market strategist at JPMorgan Asset Management, told Bloomberg TV. “It should be reaffirming the fact that we see a global economy that’s looking relatively healthy.”
Citadel’s Paul Hamill says investors aren’t "shocked or surprised" about the rise in the 10-year Treasury yield.
Elsewhere, aluminum extended its...