Stocks Steady With Bond Yields; Brent Near $65

Stocks and bond yields steadied as investors digested the implications of a run-up in borrowing costs that had pushed them to their highest level in a year. Crude oil and copper jumped. European shares opened flat, with miners and tech stocks leading gains in the Stoxx Europe 600 index. S&P 500 futures retreated after the index closed flat. Brent oil briefly jumped above $65 a barrel, a pre-pandemic high, as a cold blast that’s taken out almost 40% of U.S. crude production morphed into a global supply shock. Airbus shares fell as much as 4.6%, after reporting results that were strong but guidance that disappointed.

Concerns are mounting that bond yields near the highest level since the early days of the pandemic could spoil the stock rally. The question of how high borrowing costs can go before they become a drag on corporate profits and the economic recovery is weighing on markets and stoking volatility. Still, with vaccines being rolled out and economic activity picking up around the world, investors continue to bet on share market gains while shifting more into cyclical stocks.

While some recent data highlighted momentum in the U.S. economy, Federal Reserve officials didn’t see the conditions for reducing their massive asset-purchase program being met for “some time” at their January policy meeting, a record of the gathering released Wednesday showed.

Stocks

Futures on the S&P 500 Index decreased 0.3% as of 8:35 a.m. London time.The Stoxx Europe 600 Index climbed 0.1%.The MSCI Asia Pacific Index decreased 0.8%.The MSCI Emerging Market Index declined 0.8%.

Currencies

The Bloomberg Dollar Spot Index dipped 0.1%.The euro gained 0.2% to $1.2057.The British pound jumped 0.3% to $1.3894.The onshore yuan weakened 0.2% to 6.469 per dollar.The Japanese yen strengthened 0.1% to 105.77 per dollar.

Bonds

The yield on 10-year Treasuries rose one basis point to 1.28%.The yield on two-year Treasuries climbed less than one basis point to 0.10%.Germany’s 10-year yield gained one basis point to -0.36%.Japan’s 10-year yield dipped less than one basis point to 0.097%.Britain’s 10-year yield jumped two basis points to 0.592%.

Commodities

West Texas Intermediate crude increased 0.8% to $61.63 a barrel.Brent crude gained 1% to $64.97 a barrel.Gold strengthened 0.3% to $1,781.89 an ounce.

Stocks Steady With Bond Yields; Brent Near $65: Markets Wrap, Bloomberg, Feb 18