U.S. stocks rise, bonds calm as Japan yield panic ebbs - BNN Bloomberg

The Stoxx Europe 600 Index rebounded 0.8 per cent after hitting its lowest level since Nov. 9. Futures on the S&P 500 rose 0.5 per cent after the underlying index closed higher on Tuesday for the first time in four sessions, providing a moment of respite in one of the worst years for stocks and bonds in more than a decade.

Japan's decision to raise the upper limit of its 10-year bond yield has set in motion wagers that the BOJ will join its peers next year in raising interest rates. Already, surging yields have shrank the worldwide stock of negative-yielding debt to about U.S.$686 billion, from a US$18.4 trillion peak reached two years ago.

“Japanese buyers are already overweight dollar cash and other currencies. They will use it to buy yen and Japanese government bonds as domestic yields rise,” Deutsche Bank strategist George Saravelos told clients, predicting currency markets to see the biggest impact.

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