(Bloomberg) — Treasury bonds started the year cautiously as traders reduced their bets on interest rate cuts this year. Oil prices rose as tensions rose in the Red Sea.
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U.S. 10-year Treasury and German Bund yields rose more than five basis points as money markets bet on less than 150 basis points of Federal Reserve easing in 2024. Stocks were mixed, with U.S. stock futures little changed, Europe's benchmark Stoxx 600 0.2% higher and Asian stocks retreating after weak Chinese data.
Brent crude oil prices rose 2% after Iran sent a warship in response to the US Navy sinking of three Houthi boats over the weekend. In general, traders say there are signs of market exhaustion after the S&P 500 rose more than $8 trillion last year.
“We should expect some sort of consolidation, correction or pullback — something,” John Roque, technical analyst at 22V Research, wrote in a note.
Elsewhere, Bitcoin climbed above $45,000 for the first time in nearly two years as anticipation grows over expected U.S. approval for an exchange-traded fund that invests directly in the largest token.
Sentiment in Asia turned sour after Chinese President Xi Jinping acknowledged that some businesses and citizens had endured a difficult 2023, in a rare acknowledgment of the domestic headwinds facing the country.
Adding pressure to China's markets, people familiar said that ASML Holding NV, a maker of semiconductor manufacturing equipment, has halted shipments of some of its machines to China at the request of U.S. President Joe Biden's administration.
The yen weakened against all of its Group of 10 peers in weak trading as investors monitored conditions following an earthquake in Japan on Monday.
The story goes on
Despite continued weakness in China, some investors believe a nearly 60% drop is a signal to buy Chinese stocks. Nearly a third of the 417 respondents to Bloomberg's latest Markets Live Pulse survey said they will increase their China investments in the next 12 months.
Important events this week:
Eurozone S&P Global Eurozone Manufacturing PMI, Tuesday
UK S&P Global UK Manufacturing PMI, Tuesday
Unemployment in Germany, Wednesday
US FOMC minutes, ISM Manufacturing, jobs, light vehicle sales, Wednesday
Richmond Fed President Tom Barkin – a FOMC voter in 2024 – speaks on Wednesday
China Caixin Services PMI, Thursday
Eurozone S&P Global Eurozone Services PMI, Thursday
US initial jobless claims, ADP employment, Thursday
Eurozone CPI, PPI, Friday
US Non-Farm Payrolls/Unemployment, Factory Orders, ISM Services Index, Friday
Richmond Fed President Tom Barkin – a FOMC voter in 2024 – speaks on Friday
Some of the key moves in the markets:
Shares
The Stoxx Europe 600 was up 0.2% at 10:17 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.2%
The futures on the Dow Jones Industrial Average hardly changed
The MSCI Asia Pacific Index fell 0.6%
The MSCI Emerging Markets Index fell 0.6%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.4% to $1.1000
The Japanese yen fell 0.6% to 141.72 per dollar
The offshore yuan fell 0.3% to 7.1431 per dollar
The British pound fell 0.1% to $1.2708
Cryptocurrencies
Bitcoin rose 4.8% to $45,721.41
Ether rose 3.2% to $2,413.94
Tie up
The 10-year Treasury yield rose seven basis points to 3.95%
The yield on 10-year German government bonds rose eight basis points to 2.10%
The 10-year UK government bond yield rose 10 basis points to 3.64%
raw materials
Brent crude rose 2.3% to $78.80 a barrel
Spot gold rose 0.6% to $2,074.68 an ounce
This story was produced with support from Bloomberg Automation.
– With support from Joanna Ossinger and Zhu Lin.
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