(Bloomberg) — Europe’s government bonds surged and the euro weakened after fresh warning signs over the health of the region’s economy, just days before the central bank is expected to deliver another interest-rate hike.
German benchmark yields dropped at least seven basis points after data showed a decline in euro-area manufacturing and services gauges. That also drove down the common currency by as much as 0.5% to $1.1066, its lowest since July 12.
Treasuries followed the advance ahead of preliminary US PMIs for July. The 10-year yield slipped 4 basis points to 3.79%.
In Europe, the poor economic data is fanning doubts over how much further the central bank can keep hiking interest rates. While policy makers are still expected to deliver a quarter-point increase this week, taking the key rate to 3.75%, traders are now betting it won’t go past 4% and will then cut next year.
“We are not long schatz for nothing,” said Benoit Gerard, rates strategist at Natixis, referring to the two-year German bond, among the most sensitive to rate policy. Market pricing of the peak rate is “a bit too high, according to our assessment of the euro zone situation and the balance of power in the Governing Council,” he added.
Euro-Zone Private Sector Contracts in Dire Start to Quarter
The challenge for policymakers is to decide whether the 400 basis points of monetary tightening they’ve already implemented since last July — in addition to whatever they do on Thursday — is enough to tame inflation.
Data last week showed that inflation has slowed to 5.5% from almost double that at its peak, but that’s due more to a reversal in natural gas prices than the ECB’s action so far. Once energy and food are removed, so-called core inflation remains higher than 12 months ago.
“The US economy remains head and shoulders above the rest of the world. Period,” Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., wrote in a note. “The Fed is widely expected to deliver a hawkish message.”
The UK’s bonds also rallied Monday, for much the same reason: S&P Global Market Intelligence said its index tracking sentiment among purchasing managers fell to 50.7 in July, compared to a consensus estimate of 52.3.
The yield on 10-year gilts fell as much as 11 basis points to 4.17% after traders reined in bets on the Bank of England’s peak rate. UK policymakers are due to meet next week.
–With assistance from James Hirai.
(Updates with Treasuries move and comment from second paragraph)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
