European stocks fall as 10-year yield on Treasuries hit 5 percent

BLOOMBERG

European stocks fell as the 10-year yield on Treasuries hit 5% for the first time since 2007.
Europe’s Stoxx 600 index sank 0.4% and S&P 500 equity futures edged lower. The yield on the US 10-year note rose nine basis points as investors bet signs of a strong economy will keep interest rates higher for longer. Oil slipped to $87 a barrel.
Volkswagen AG retreated almost 3% after earnings missed expectations and Royal Philips NV lost 4% after reporting a drop in order intake. The UK’s Vistry Group Plc tumbled after announcing hundreds of job cuts.
Traders are closely watching developments in the Middle East after Hamas released two US hostages. Still, the respite may prove fleeting with Israel stepping up air raids on Gaza in preparation for the “next phase” of its conflict with Hamas.
“It is a very volatile situation,” said Stuart Cole, head macro economist at brokerage Equiti Capital. “While we may be seeing some dialing back of the hedging trades seen ahead of the weekend, this does not mean we are seeing any pro-risk sentiment emerging.”
This week, traders will be seeking clues on the outlook for global interest rates with inflation readings in Australia and Japan as well as economic activity data in the US and Europe.
Fed Chairman Jerome Powell is due to give remarks and the European Central Bank will deliver a policy decision later in the week.
In Argentina, investors were bracing for a selloff after Economy Minister Sergio Massa did better than forecast in Sunday’s presidential vote, dashing hopes for an outright win by a more market-friendly candidate. The nation’s dollar bond maturing July 2046 declined for a fourth day.