(Bloomberg) — Global bonds steadied on Friday as markets returned to firmer footing at the end of a week that saw the steepest decline in the Nasdaq 100 since the pandemic meltdown.
Markets stabilized after central banks from Asia to Europe moved to calm a panic that had sent U.S. government bond yields to their highest level in a year. That triggered a loss of almost $900 billion this week in the value of the tech-heavy Nasdaq, the biggest since March.
“If U.S. rates stabilize at these levels, which they appear to be, then equities will find calm,” said Nema Ramkhelawan-Bhana, a strategist at Rand Merchant Bank in Johannesburg. Fears that central banks withdraw support too fast may be overdone “given persistent rhetoric, with the Fed holding firm on its accommodation,” she said.
Contracts on the Nasdaq 100 and S&P 500 fluctuated before turning modestly higher, suggesting a reprieve may be in store for stocks when U.S. markets open. The 10-year Treasury yield fell back below 1.5% after trading as high as 1.6% Thursday, while the dollar extended a rally to head for its best week since January.
Investors are getting increasingly worried that accelerating inflation could trigger a pullback in monetary policy support that has fueled gains in risk assets amid the pandemic. Federal Reserve officials so far say surging Treasury yields reflect optimism and have stressed that the central bank has no plans to tighten policy prematurely.
What Investors Are Watching After the Spike in Treasury Yields
Yields on core European bonds ticked lower, and stocks in the region pared losses after the benchmark Stoxx Europe 600 slumped more than 1.5% at the open.
Elsewhere, oil retreated from its the highest in more than a year as traders mulled depleting global inventories. Bitcoin headed toward $45,000.
Some key events to watch this week:
Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.
These are some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% by &:51 a.m. in New York.Nasdaq 100 futures gained 0.2%.The Stoxx Europe 600 index dropped 1%.The MSCI Asia Pacific index declined 3.5%.The MSCI Emerging Markets index retreated 3%.
Currencies
The Bloomberg Dollar Spot Index rose 0.3%.The euro was 0.5% lower at $1.2118.The British pound fell 0.4% to $1.3956.The Japanese yen was little changed at 106.24 per dollar.
Bonds
The yield on 10-year Treasuries dipped five basis points to 1.47%.Germany’s 10-year yield dropped three basis points to -0.26%.The yield on U.K. 10-year bonds rose three basis points to 0.82%
Commodities
West Texas Intermediate crude fell 1.8% to $62.42 a barrel.Gold fell 0.5% to $1,762 an ounce.
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