Bond Rally Gets New Fuel as Data Fans’ Rate Bet: Markets Wrap Ask NetWorth

(Bloomberg) — Central banks are poised to accelerate interest rate cut cycles.

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The yield on 10-year German bonds has fallen by seven basis points since January, after euro-area inflation fell below the European Central Bank’s 2% target for the first time since 2021. The ECB will deliver a consecutive quarter point cut this month.

Christine Lagarde, president of the European Central Bank, said the bank was more confident of bringing price pressures under control. His US counterpart, Federal Reserve Chairman Jerome Powell, cautiously set a timetable for further rate cuts on Monday, saying the central bank would lower interest rates “over time”.

The Stoxx 600 added 0.3%. Contracts for the S&P 500 were little changed after posting a new record high on Monday following its fourth straight quarter of gains — the longest such winning stretch since 2021. Treasuries advanced.

Money markets are pointing to a one-in-three chance the central bank will deliver another half-point rate cut in November, and a total of 190 basis points of easing by the end of next year. That scenario may not pan out as expected, warns Larry Fink.

“The amount of slack in the forward curve is crazy,” said Fink, CEO of BlackRock Inc., in an interview with Bloomberg TV. “There is still room for easing, but not as much as the forward curve would indicate.

Markets also braced for any fallout after Israel said it had launched “targeted ground strikes” in Lebanon. Oil prices fell as prospects for a Libyan supply return weighed on risks of a wider conflict in the Middle East.

Marine shipping company ZIM Integrated Shipping fell as much as 4.9% in premarket trade after dock workers walked out of every major port on the US East and Gulf coasts, signaling the start of a strike. FedEx Corp. and United Parcel Service Inc. The rise followed what Stifel said were “the most obvious beneficiaries” of disruption from the strike.

Highlights of this week:

• Atlanta Fed President Raphael Bostick, Fed Governor Lisa Cook, Richmond Fed President Thomas Parkin and Boston Fed President Susan Collins speak on Tuesday

• ECB policymakers speaking on Tuesday include Olli Rehn, Luis de Guindos, Isabel Schnabel and Joachim Nagel.

• BOE Chief Economist Huw Pill speaks on Tuesday

• South Korea CPI, S&P Global Manufacturing PMI on Wednesday

• Fed speakers include Thomas Parkin of Richmond, Beth Hammock of Cleveland, Alberto Musalam of St. Louis and Federal Reserve Governor Michelle Bowman.

• US non-farm payrolls, Friday

The story continues

Some key movements in the markets:

Shares

• The Stoxx Europe 600 was up 0.3% as of 10:52 a.m. London time.

• S&P 500 futures were little changed

• Nasdaq 100 futures were little changed

• Futures for the Dow Jones industrial average fell 0.3%

• The MSCI Asia Pacific index rose 0.3%

• The MSCI Emerging Markets Index was little changed

Coins

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.4% to $1.1094

• The Japanese yen was little changed at 143.70 per dollar

• The offshore yuan fell 0.2% to 7.0221 per dollar

• The British pound fell 0.4% to $1.3327

Cryptocurrencies

• Bitcoin rose 0.2% to $63,929.96

• Ether rose 0.9% to $2,637.05

Bonds

• The yield on 10-year Treasuries fell four basis points to 3.74%.

• Germany’s 10-year yield fell seven basis points to 2.06%

• Britain’s 10-year yield fell six basis points to 3.95%

materials

• Brent crude fell 1.6% to $70.53 a barrel

• Spot gold rose 0.5% to $2,648.02 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Jason Scott, Allegra Catelli and Alice Adkins.

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