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(Bloomberg) — Stocks and bonds fell on a wave of government and corporate bond supply ahead of this week’s key U.S. inflation data.
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U.S. stock futures fell along with Europe’s Stoxx 600 index as investors ignored the tech-driven rally that spread to global markets. Shares and bonds of Spanish plasma company Grifols SA fell after short seller Gotham City Research LLC released a report criticizing the company’s financial reporting.
Monday’s rally proved short-lived, with investors once again starting to worry about risks from inflation to bond volatility as a tsunami of corporate and government debt floods the market.
BlackRock has warned of the dangers of debt-fueled government spending in an election year as government debt supply from countries such as the UK, Italy and Belgium slumps. Long-term Gilts led the losses after the government sold 2.25 billion pounds ($2.9 billion) of 20-year bonds.
“The new year is already putting the 2023 Santa rally to the test,” said Mizuho International strategist Evelyn Gomezlichty, adding that the unexpected strength of the U.S. workforce, the overextension of the rally, new government debt and He cited pressures such as the large supply of corporate bonds. At the same time, he said it was unlikely that the yield on the 10-year U.S. Treasury would break above last week’s highs by the time Thursday’s U.S. inflation report is released.
The yield on the U.S. benchmark 10-year Treasury note is above 4%, a level that former bond magnate Bill Gross called “overvalued,” as traders look to the Fed’s sharp rise after strong labor market data. It remained at a level it called “overvalued,” despite rising 17 basis points last week, prompting investors to ease bets on economic easing.
Gross turns away from US Treasuries, saying 10-year bonds are overvalued by 4%
Monday’s rally in U.S. tech stocks came as Nvidia soared after announcing a new artificial intelligence product for personal computers. On Monday, the Nasdaq 100 posted its biggest gain since November, the S&P 500 traded near its all-time high, and Japan’s Nikkei 225 index closed 1.2% higher than in March 1990. This is the highest level since then.
Elsewhere, Bitcoin soars above $47,000 on speculation that the US is poised to approve the launch of the country’s first exchange-traded fund (ETF) to invest directly in the world’s largest digital asset. After that, it fell.
Oil prices rebounded from their steepest decline in nearly a month on signs of weakness in the physical market, including sharp price cuts by OPEC+ leader Saudi Arabia.
This week’s main events:
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China’s comprehensive lending, money supply, new yuan lending, Tuesday
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Eurozone unemployment rate, Tuesday
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German industrial production Tuesday
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US Trade, Tuesday
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US wholesale inventory Wednesday
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The World Economic Forum’s Global Risks Report will be released on Wednesday.
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New York Fed President John Williams speaks on Wednesday
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US CPI, new unemployment claims, Thursday
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China CPI, PPI, Trade, Friday
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UK industrial production, Friday
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US PPI, Friday
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Some of the largest U.S. banks will release fourth-quarter financial results on Friday.
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Minneapolis Fed President Neel Kashkari speaks on Friday
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ECB Chief Economist Philip Lane speaks on Friday
The main movements in the market are:
stock
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As of 5:59 a.m. New York time, S&P 500 futures were down 0.3%.
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Nasdaq 100 futures fell 0.4%
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Dow Jones Industrial Average futures fell 0.3%.
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Stoxx European 600 drops 0.2%
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MSCI World Index little changed
currency
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Bloomberg Dollar Spot Index rose 0.1%
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The euro fell 0.1% to $1.0935.
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The British pound fell 0.2% to $1.2724.
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The Japanese yen rose 0.1% to 144.06 yen to the dollar.
cryptocurrency
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Bitcoin fell 1.4% to $46,460.91.
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Ether fell 1.9% to $2,293.77.
bond
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The 10-year Treasury yield rose 1 basis point to 4.04%.
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Germany’s 10-year bond yield rose 5 basis points to 2.19%.
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The UK 10-year bond yield rose 5 basis points to 3.82%.
merchandise
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West Texas Intermediate crude rose 1.9% to $72.08 per barrel.
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Spot gold rose 0.4% to $2,035.39 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Joanna Ossinger.
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