Treasuries dropped alongside the dollar amid speculation that Washington lawmakers have made some progress on
a stimulus package to be financed by trillion-dollar borrowing.
The US 10-year yield broke above 0.8% to a four-month high and European bonds followed suit after Democrat House Speaker Nancy Pelosi expressed hope for political compromise on a stimulus bill this week. Outside of debt markets, the picture was more mixed.
European stocks slumped for a third day, with gold miners Fresnillo Plc and Centamin Plc dropping after cutting their production guidance. Telecom equipment maker Ericsson was a bright spot, climbing after a profit beat. S&P 500 futures edged lower. Netflix Inc. tumbled in pre-market trading after missing subscriber estimates.
Pelosi said she also hoped that fresh stimulus spending would be retroactive, although the Republican Senate majority leader has warned the White House against a bigger Democrat-led deal before the vote on November 3. The administration said its offer is now up to $1.88 trillion, below the $2.2 trillion Pelosi has pushed for.
“The rise in yields suggests that the market thinks a stimulus deal will be forthcoming and that the Democrats are set to take both the presidency and the Senate at the November 3 election,” said John Hardy, chief foreign-exchange strategist at Saxo Bank.
Elsewhere, the yen headed for its best day versus the dollar since August. The pound jumped after European Union chief Brexit negotiator Michel Barnier said a deal is within reach. Copper rises to an almost two-year high on supply disruptions in Chile.
Oil dropped to $41 a barrel in New York after an industry report pointed to a surprise increase in American crude stockpiles.
Futures on the S&P 500 Index increased 0.1% as of 10:32 am New York time and the Stoxx Europe 600 Index decreased 0.9%.
While the MSCI Asia Pacific Index rises 0.6%, the MSCI Emerging Market Index gained 0.3%.
The Bloomberg Dollar Spot Index dipped 0.3% to 1,160.77 and the euro increased 0.2% to $1.1845.
While the British pound climbed 0.8% to $1.3048, the Japanese yen strengthened 0.5% to 104.93 per dollar.
The yield on 10-year the Treasuries climbed three basis points to 0.81% and the yield on two-year Treasuries climbed one basis point to 0.15%.
While Germany’s 10-year yield gained one basis point to -0.59%, Britain’s 10-year yield jumped three basis points to 0.216%.
West Texas Intermediate crude dipped 0.3% to $41.10 a barrel and gold strengthened 0.6% to $1,917.83 an ounce.