Stocks climb as Treasury rally takes breather; dollar rises

Bloomberg

US stocks rallied and Treasuries fell as investor concern over an economic downturn showed signs of easing. The dollar edged higher.
Every industry in the S&P 500 Index advanced, with technology and consumer shares leading gains. The yield on benchmark US debt rose after closing below 2.4 percent though the spread between three-month and 10-year rates remained in negative territory. The greenback traded in tight ranges, and haven currencies were mostly lower.
Risk assets rebounded on speculation that the recent
sell-off in global markets had been overdone. Goldman Sachs Group Inc added its voice to those advising against panic over the inversion of the US yield curve — which has served as a recession warning. While the economic backdrop indeed may be less favourable, stocks may end up doing well with a flat curve, the analysts wrote.
“It’s premature to talk about the yield curve meaning that we have to go into recession,” Philip Wyatt, a Hong Kong-based economist for UBS Group AG, said on Bloomberg Television. “It’s possible for the long end to run too far, too fast,” he said of US Treasuries.
The outcome of trade talks between America and China and any developments in Britain’s tortuous exit of the European Union could help determine sentiment from here. The pound turned higher as a Brexit hardliner indicated he’s willing to back Theresa May’s deal, a move that could be a game-changer for the prime minister if others follow suit.
Gains across all but one sector helped the Stoxx Europe 600 into the green. Japan’s Topix Index jumped more than 2.5 percent, a day after it had its biggest slide this year. European bonds tracked Treasuries lower and the euro slipped against the greenback.
Elsewhere, oil surged as rising tension in Venezuela threatened revived fears of supply losses. Gold retreated for the first time in three days. Emerging-market stocks rose.
US-China trade talks resume, with a cabinet-level American delegation due in China. UK Parliament is set to stage several key votes on Brexit on Wednesday. Fed Governor Randal Quarles will speak on Friday to the Shadow Open Market Committee on “Strategic Approaches to the Fed’s Balance Sheet and Communications.”
The S&P 500 Index rose
0.7 percent to 2,818.10 in
New York. The Stoxx Europe 600 Index climbed 0.7 percent, the first advance in a week. The MSCI Asia Pacific Index
jumped 1 percent. The MSCI Emerging Market Index increased 0.2 percent.
The Bloomberg Dollar Spot Index added 0.2 percent. The euro declined 0.2 percent to $1.1291. The British pound advanced 0.3 percent to $1.3237. The Japanese yen decreased 0.4 percent to 110.46 per dollar.
The yield on 10-year Treasuries jumped four basis points to 2.43 percent. Germany’s 10-year yield increased one basis point to -0.02 percent. Britain’s 10-year yield rose two basis points to 1.011 percent.
The Bloomberg Commodity Index climbed 0.4 percent. Gold decreased 0.3 percent to $1,318.05 an ounce. West Texas Intermediate crude advanced 2.1 percent to $60.07 a barrel.