Stocks rise, bonds decline as US govt shutdown averted –

BLOOMBERG

Stocks rose and Treasuries fell after US lawmakers reached a deal on the weekend to avoid a government shutdown.
Europe’s Stoxx 600 index rose about 0.2% on the first trading day of the fourth quarter, and futures on the Nasdaq 100 advanced 0.7% after compromise legislation passed on Saturday to keep the government running until November 17.
Both indexes trimmed gains from earlier in the session as investors returned to parsing economic data and higher oil prices to gauge whether central banks will raise interest rates any further. Treasury 10-year yields rose as much as five basis points to the highest since 2007, while German borrowing costs advanced about three basis points.
“Financial markets were bracing for a shutdown, so there’s an element of relief, but it’s only a temporary lifting of one of the clouds hanging over the markets now,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management. “Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks.”
The US government funding deal may spur markets to bring forward bets of a November rate hike, some traders said. Swaps are pricing just under a one-in-three chance of a November move, according to data compiled by Bloomberg.
Investors could glean clues later in the day when Fed chief Jerome Powell speaks at a roundtable discussion, alongside Philadelphia Fed President Patrick Harker. Their views will be of particular interest after New York Fed boss John Williams suggested interest rates should stay high for some time. Among individual European stock movers, asset manager Mandatum debuted on Helsinki’s stock market, the biggest listing in five years. In US premarket trading, tech stocks led gains, with strategists at Goldman Sachs Group Inc predicting the sector to do well, benefiting from lower valuations after the recent selloff and a pullback in bond yields.
In currency markets, the dollar edged higher versus its Group-of-10 peers, after enjoying its best quarter in a year. Against the yen, it briefly touched a year-to-date high of 149.82, after the Bank of Japan said it would conduct an additional buying operation.