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BLOOMBERG
A selloff in government bonds accelerated Monday as the threat of further rate hikes unsettled traders. The yield on 30-year German bonds rose nine basis points to 2.72%, the highest since early 2014. Similar-maturity Treasury yields jumped seven basis points. US equity futures rose modestly, signalling a rebound from Friday’s retreat.
Federal Reserve Governor Michelle Bowman said over the weekend that the US central bank may need to raise rates further in order to fully restore price stability. Investors also considered mixed signals from Friday’s US jobs, which showed wages above forecast even as payrolls growth moderated.
“We don’t think central banks will get the rise in unemployment rate and sustained moderation in wage growth in the coming year that they hope to see,” ADA Economics Ltd. Chief Economist Raffaella Tenconi said in an interview with Bloomberg TV.
Trading in stocks was more subdued. European stocks retreated as a index of German industrial output fell to a six-month low, underscoring weakness in the economy. Volumes in Europe were also relatively light, with trading of Euro Stoxx 50 stocks about 40% less than the 30-day average.
The key data point for the week will be US consumer price index reading on Thursday, which is expected to show moderate price growth. The index is projected to rise 0.2% in July for a second month after excluding food and energy costs, marking the smallest back-to-back gains in 2 1/2 years.