London/Singapore — Global stocks and commodities rose on Friday while the dollar headed for its biggest weekly drop since January, as sentiment was buoyed by signs the Fed will skip a rate hike at its next meeting and the approval of US debt ceiling legislation.
“The release is really going to dictate the future of Fed policy after the speech of the vice chair-designate Jefferson that likely took a June rate hike off the table,” said Jeff Schulze, head of economic and market strategy at Clearbridge The dovish tone caused a rally in US Treasuries. The 10-year yield, last at 3.6142%, was steady on the day on Friday, but was set for a weekly drop of about 20 basis points, its biggest weekly fall since mid-March.
Nasdaq and S&P 500 futures were both up about 0.5% after each index reached nine-month closing highs on Thursday.Boosting the mood was the US Senate passing bipartisan legislation backed by President Joe Biden that lifts the government’s $31.4-trillion debt ceiling, averting what would have been a first-ever default.
“We’ve probably got some degree of rebuild of that treasury general account,” said Shucksmith, which, along with quantitative tightening, “means I think there’s going to be tightening of financial conditions.” The euro is up 0.27% against the dollar this week, dragged by lower European yields after inflation showed signs of slowing, welcome news for the European Central Bank and reinforcing market bets that the ECB too could be done with interest rate hikes in the coming few months.
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