[1/2]A chart of the German DAX stock price index is photographed at the Frankfurt Stock Exchange, Germany, on October 27, 2023. REUTERS PHOTO/STAFF/FILE Obtaining licensing rights
SINGAPORE/LONDON, Dec 5 (Reuters) – German 10-year government bond yields fell to their lowest levels in six months on Tuesday, and global stocks fell from their highest levels in four months as traders increased their bets on interest rate cuts from the European Central Bank in early 2017. 2024. With Fed forecasts.
The 10-year German Bund yield fell by as much as 7 basis points to 2.28%, its lowest level since June 2, after European Central Bank official Isabel Schnabel said in an interview with Reuters that further interest rate hikes ” “Somewhat unlikely,” after an unexpectedly large spike. Fall of inflation.
Bond yields move inversely with prices, and government bonds in most developed markets globally took a hit in 2022 and earlier this year after a rapid rise in official central bank interest rates.
“The final nail in the coffin of further interest rate hikes, even if no one expected it,” Andrzej Szczepaniak, chief economist at Nomura Bank, said of Schnabel’s comments.
Traders are now close to pricing in the full 25 basis points of interest rate cuts from the European Central Bank at its March meeting, and nearly 150 basis points of cuts by the end of 2024.
The euro fell 0.2 percent to $1.0815.
Interest rates are also expected to be cut in the US, with traders seeing 50 basis point cuts as likely by June. The 10-year US Treasury yield fell about 6 basis points to 4.228%, retreating from some of the 6 basis point rise the previous day.
“The market has priced in the soft landing scenario (for the US economy) to perfection,” said Moh Siong Sim, a strategist at the Bank of Singapore. “Overnight there was a bit of a reality check – maybe it was too ambitious.”
US jobs data is scheduled to be released at 1500 GMT, and the most important data of the week, US non-farm payrolls data, which last month showed signs of a slowdown in the labor market, will be published on Friday.
Stock markets fell somewhat on Tuesday with the MSCI World Index (.MIWD00000PUS) down 0.17%, pulling away from a four-month high hit on Monday after the November storm, when expected interest rate cuts sent stocks in the US soaring. And Europe.
The broad European STOXX 600 index rose 0.15% (.STOXX), although US S&P 500 futures fell 0.38%. Earlier in the day, MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 1.1%, with Chinese stocks falling.
China’s blue-chip stocks (.CSI300) fell 1.9% and are at their lowest level since early 2019, while Hong Kong’s Hang Seng Index (.HSI) is down more than 17% for the year so far. Global stocks rose nearly 15%, as investors exited Chinese assets while the economy faltered.
Late in Asian trading, ratings agency Moody’s lowered its outlook on the Chinese government’s credit rating to negative from stable, citing lower medium-term economic growth and risks from a major correction in the country’s huge real estate sector.
Pessimistic Reserve Bank of Australia
The Australian dollar was the biggest mover among developed market currencies, and fell by 0.85% to 0.6563 US dollars after the central bank kept interest rates unchanged, as expected, but stressed that the future direction of interest rates will depend on the data.
“We believe markets were expecting a more hawkish statement given the unusually long time before the next (RBA) meeting on February 6,” said Lenny Jin, global exchange markets analyst at HSBC.
“The RBA has not pushed aggressively against the ongoing trend of easing in financial conditions that has occurred globally since November.”
Lower coal and gas prices pushed Australia’s current account into deficit in the September quarter, data showed on Tuesday.
In commodities trading, Brent crude futures were roughly flat at $77.93 a barrel, after falling overnight amid doubts that producers will make further production cuts.
Chicago wheat held near its highest level since late August after the USDA confirmed the largest one-time private sale to China in years.
Gold hung above $2,000 after a tough session on Monday, when it reached a record high in Asia before falling sharply.
(This story has been corrected to say US jobs data will be released at 1500 GMT, not 1530 GMT, in paragraph 9. The error was also in previous versions of this story.)
Editing by Kim Coghill and Andrew Heavens
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