Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stocks set record highs as bond yields slide

EconomyJun 11, 2021 04:57PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A man is reflected on a stock quotation board in Tokyo, Japan February 26, 2021. REUTERS/Kim Kyung-Hoon 2/2

By Herbert Lash and Tom Wilson

NEW YORK/LONDON (Reuters) -European shares, the S&P 500 and an index of global stock performance scaled new peaks while yields on U.S., Japanese and European government debt fell on Friday as investors embraced the easy monetary policies of major central banks.

Investor sentiment rose in Europe after the European Central Bank raised its growth and inflation projections on Thursday, and also renewed a pledge to keep stimulus flowing.

The pan-regional STOXX Europe 600 index rose 0.7% to a record close, posting its sixth straight session of gains and best weekly performance at 1.1% since early May.

The MSCI all-country world equity index, a benchmark that tracks shares in 50 countries, set a new intraday high and record close at 719.52, up 0.2% in a late-day surge that also lifted the S&P 500 to an all-time close.

Stocks on Wall Street seesawed most of the session near breakeven as investors bought tech stocks after shrugging off data on Thursday that showed year-on-year inflation spiked to 5.0% in May, a jump the Federal Reserve has said is transient.

Declining Treasury yields have confounded investors who see signs of inflation being more persistent than the Fed's view that sharply rising consumer prices will be short-lived.

"You've seen an increasing comfort level with the Fed's stance that inflation is going to be transitory, and as that sinks in, you continue to see large buyers of bonds, which is keeping yields from rising," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

Inflation data has alarmed many investors, but for the moment the reaction is stocks are still preferable to bonds in an inflationary environment, said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

"There is a concern that eventually you could get some migration out of stocks into bonds," Meckler added. "But right now we seem to be at that pre-tipping point where bonds don't yield enough to scare people out of stocks."

The Dow Jones Industrial Average rose 0.04%, the S&P 500 gained 0.19% and the Nasdaq Composite added 0.35%.

U.S. growth-oriented stocks slightly outpaced value stocks as the two styles vied for leadership: big tech stocks added the most upside followed by financial shares.

Jack Ablin, chief investment officer at Cresset Capital Management, said he is concerned about the long-term outlook for equities because of stretched valuations once interest rates start to rise, perhaps starting in late in 2022.

"Value-oriented cyclical companies with good quality balance sheet are probably the best deal in this kind of market," Ablin said.

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3%.

Yields on 10-year U.S. Treasury notes slid 0.5 basis points to 1.4535% after earlier declines that positioned the benchmark for its biggest weekly decline in a year.

Euro area bond yields followed Treasuries. Benchmark German 10-year bonds fell 3 basis points to -0.28% and were set for their best week of the year. Yields move inversely with prices.

Falling expectations that higher inflation could lead to early Fed tightening prompted a flattening of the U.S. yield curve, with the spread between the 10-year and 2-year yield at its narrowest since late February on Friday.

Yields will likely move higher again as economies reopen from COVID-19 pandemic lockdowns.

"We still think consumers are going to help prices higher, when these economies reopen properly, that people can start traveling again, spending again," said Jeremy Gatto, investment manager at Unigestion. "We are going to get a further boost from the consumption side, and we therefore expect bond yields to move higher."

The euro and sterling dipped against the dollar as investors bet interest rates would stay lower for longer in Europe.

The dollar index rose 0.49%, with the euro down 0.51% to $1.2107. The Japanese yen weakened 0.31% versus the greenback at 109.66 per dollar.

Oil prices rose to multi-year highs, heading for a third straight week of gains on the improved outlook for worldwide demand as rising vaccination rates lead to a lifting of pandemic curbs.

Brent crude futures rose 17 cents to settle at $72.69 a barrel. U.S. crude futures settled up 62 cents at $70.91 a barrel.

U.S. gold futures settled 0.9% lower at $1,879.6 an ounce.

Stocks set record highs as bond yields slide
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (7)
Mark Stallone
Mark Stallone Jun 12, 2021 2:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is great! We should all enjoy it now before the impending recession comes in 23' / '24 when the housing market crashes (again).
JAMES CUNHA
JAMES CUNHA Jun 12, 2021 2:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I believe we are already in a recession.
Pratt Man
Pratt Man Jun 11, 2021 8:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Rising prices increases corporate profits and workers salaries. We've been stuck in a low inflation periods for over a decade. 4% inflation is good.. Not bad.
Tyrone Jackson
Tyrone Jackson Jun 11, 2021 8:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Exactly
Dave Jones
Dave Jones Jun 11, 2021 5:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Everything is awesome!
Jacob Steinschlag
Jacob Steinschlag Jun 11, 2021 3:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
we literaly had the worst inflation report of the DECADE. And yet, inflation fears 'ease'. It makes no sense. When we had better inflation numbers the market, especially the tech and growth sector was all like 'get out while you can' and now where the numbers are here nobody cares anymore. My theory is that the market was overleveraged in shorts which eventually needed to cover. That explains why NASDAQ wasn't rising the past couple days although buying volumes suggested a 1% increase every day and yesterday, while actually more shares where sold than bought, NASDAQ rallied - most likely due to short position exits on Futures.
Jouni Matero
Jouni Jun 11, 2021 3:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Isn't it funny how WS analysts twist every super bad number to be good news or news is just "shrugged off" by investors (billionaires).
Jokers R Us
Jokers R Us Jun 11, 2021 3:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Keep buying stocks so wallstreet can sell, this is how they roll...basically do the opposite of what the resounding wallstreet sentiment is so you can stay ahead of the curve when the cycle changes.
Henrique Erbolato
Henrique Erbolato Jun 10, 2021 11:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
vtc
noob investor
noob investor Jun 10, 2021 11:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
f u
Ritthy Phoung
Ritthy Phoung Jun 10, 2021 11:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
combodai covid-19
perplexed76 .
perplexed76 . Jun 10, 2021 11:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
KEKW
Cali Cartel
Cali Cartel Jun 10, 2021 11:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Anna James can u stf/u for while pls
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email