World stocks clung to their 17-month highs on Friday and bonds paused after this week’s rally ahead of U.S. jobs data, a gauge that could stoke or temper market expectations about aggressive policy easing by the Federal Reserve.
U.S. futures pointed to a softer opening for Wall Street as well with E-Minis for the S&P500 at -0.1 per cent. The losses in Europe followed gains in Asia, where MSCI’s broadest index of Asia-Pacific shares ex-Japan was set for its fifth straight weekly rise. Japan’s Nikkei added 0.2 per cent. Chinese shares were slightly higher with the blue-chip index up 0.5 per cent.World stocks and bonds have rallied since June on hopes global central banks will keep policy easy to support growth. A ceasefire in the protracted Sino-U.S. trade war has also bolstered sentiment.
Fed futures are fully pricing in a 25-basis-point cut when the Fed meets on July 30-31. Investors also see a 25 per cent chance of a 50-basis-point reduction. Germany’s 10-year government bond yield, a benchmark for euro zone debt, fell to minus 0.4 per cent and breached the European Central Bank’s deposit rate for the first time - a level analysts say acts as a psychological barrier even though shorter-dated German bond yields trade well below it.
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