The U.S. Treasury yield curve reached its highest in more than two months on Wednesday, while stock markets globally edged higher as Apple shares increased. Strengthening concerns over the ability of the world’s major central banks to stabilize growth have triggered a recent increase in bond yields and ignited a bout of risk-off trading.
Euro zone bond yields gained broadly following the European Central Bank Executive Board member Sabine Lautenschlaeger stated the central bank should wait on new monetary easing measures. Majority of yields reached their highest levels since Britain’s vote to leave the European Union in late June, extending a increase that started after the ECB’s policy meeting last week disappointed investors by introducing no new easing measures. In the U.S. market, bond feebleness ebbed after a drastic selloff on Tuesday sent long-dated yields to three-month highs.
On Wednesday, the gap between five-year Treasury note yields and 30-year bond yields widened as far as 123.40 basis points, the widest since July 1. Benchmark 10-year Treasury notes were last up 5/32 in price to yield 1.72 percent, from 1.73 percent on Tuesday. The U.S. dollar fell from an eight-day high versus the yen as concerns grew that the BOJ would strengthen its simulative monetary policies next week. The BOJ may deicide to make negative interest rates the main focus of future monetary easing, reported by sources. The move would underline concerns over limits to economic stimulus efforts.
“The market does perceive to a certain extent that the BOJ is tapped,” quoted Dean Popplewell, chief currency strategist at Oanda in Toronto.