Bond yields jump and stocks wilt as rate cut doubts resurface

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LONDON :U.S. government bond yields pushed to a near four-week peak on Wednesday, lifting their global counterparts and pressuring stocks, as data sowed new doubts about the timing and extent of Federal Reserve rate cuts.

FILE PHOTO: Passersby walk in front of an electric screen displaying Japan's Nikkei share average outside a brokerage in Tokyo, Japan March 21, 2024. REUTERS/Issei Kato/FILE PHOTO

The benchmark 10-year U.S. Treasury yield rose as high as 4.578 per cent, a level not seen since May 3. Yields move inversely to prices. Traders currently put the odds of at least a quarter-point interest rate cut by September at around 44 per cent following the data, from a coin toss a day earlier, according to the CME Group's FedWatch Tool.

The rise in U.S. yields spread around the world, with Germany's 10-year bond yield climbing 6 basis points to 2.648 per cent, the highest in a month. Gupta said the release of U.S. personal consumption expenditure inflation data on Friday will be an important guide for Fed policy. Economists expect PCE inflation - the Fed's preferred measure - held steady at 2.7 per cent in April from the same level in March.

In energy markets, Brent crude oil futures for July delivery rose 0.7 per cent to $84.81 a barrel, the highest since May 1, while U.S. crude futures climbed 0.75 per cent to $80.42.

 

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