10-year Treasury yields jumped higher to hit 1.60% for the first time since Monday
Wall Street equities advanced overnight after President Joe Biden signed a $1.9-trillion coronavirus relief package into law Thursday afternoon. Investors also cheered a slightly better-than-expected reading on weekly jobless claims. In particular, first-time filings for unemployment insurance last week totaled a seasonally adjusted 712,000, below an estimate of 725,000. As such, the S&P 500 added 1.04%, the Dow gained 0.58%, and the Nasdaq Composite gained 2.52%.
Asian stocks were mostly positive on Friday as investors continued to celebrate stimulus measures and lower bond yields. Biden also pledged aggressive action to speed vaccinations and move the country closer to normality by July 4. Also on the positive side, the European Central Bank said on Thursday it was ready to accelerate money-printing to keep a lid on borrowing costs. Against this backdrop, the Nikkei 225 rose 1.73% while South Korea’s Kospi climbed 1.35% and the Shanghai Composite advanced 0.47%. Meanwhile, Hong Kong’s Hang Seng bucked the trend, to close 2.20% lower.
Following the Asian trading, Treasury yields started to pick up again, sending European stocks lower at the open. In recent trading, 10-year Treasury yields jumped higher to hit 1.60% for the first time since Monday. On the positive side, the ECB policymaker, Francois Villeroy, said that there is no risk of inflation overheating in Europe, and the central bank will maintain the accommodative monetary policy as long as necessary. The pan-European Stoxx 600 fell 0.2% in early trade, with tech stocks leading losses.
As risk sentiment deteriorated again, the safe-haven dollar demand picked on Friday, sending the euro back to the 1.1930 area after failed attempts to challenge the 1.2000 barrier yesterday. It looks like the pair could stay on the defensive ahead of the weekend as traders prefer a cautious approach amid debt market volatility. If the pressure persists, the 1.1900 figure could be derailed by the end of the day and the trading week.