Macro Roundup (Feb 26)

SHANGHAI, Feb 26 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The 10-year U.S. Treasury yield briefly topped the 1.6% level on Thursday and traded at its highest level in more than a year, raising concern for investors across asset classes.

The yield on the benchmark 10-year Treasury note climbed to 1.51%, up about 12 basis points on the session. A basis point is equal to 0.01%. The yield on the 30-year Treasury bond rose to 2.286%. Yields move inversely to prices.

The 10-year traded as high as 1.614% during the session, which was the highest level since Feb. 14, 2020. Some traders described the jump above 1.6% as a “flash move,” and yields quickly fell back to near 1.5%.

The dollar index lifted off a seven-week low on Thursday after yields on 10-year U.S. Treasuries jumped as high as 1.6% following weaker-than-expected bids in a U.S. government debt auction.

The move was the latest example of currency markets taking their cue from bonds, which have been moving on the changing outlook for economic growth and inflation following unprecedented government stimulus and monetary easing along with increasing COVID-19 vaccinations.

The dollar was up 0.27% against a basket of currencies in the early New York afternoon after dipping as much as 0.26% to 89.677, its lowest since Jan. 8.

On Wall Street, futures contracts tied to the major U.S. stock indexes fell during the overnight session Thursday evening after a pop in interest rates earlier in the day helped push the Nasdaq Composite to its worst session since October.

Dow futures dropped 150 points, or 0.5%, while Nasdaq 100 futures dropped 0.9%. S&P 500 futures lost 0.5%.

The moves in extended trading came after a negative regular trading session on Thursday.

The Dow Jones Industrial Average dropped 559 points, or 1.8%, slipping from a record high. The S&P 500 lost 2.5% to clinch its worst day since Jan. 27 while the tech-heavy Nasdaq Composite shed 3.5% and suffered its biggest one-day sell-off since Oct. 28.

Oil prices remained close to 13-month highs on Thursday, with profit-taking limited by an assurance that U.S. interest rates will stay low and a sharp drop in U.S. crude output last week due to the storm in Texas.

Brent crude for April slid 0.24% to settle at $66.88 per barrel. Earlier in the session the contract traded as high as $67.70, the highest level since Jan. 2020.

U.S. West Texas Intermediate gained 0.49% to settle at $63.53 per barrel, after hitting a high of $63.81 per barrel earlier in the session, the highest level since Jan. 2020.

An assurance from the U.S. Federal Reserve that interest rates would stay low for a while weakened the U.S. dollar, while boosting investors’ risk appetite and global equity markets.

The winter storm in Texas caused U.S. crude production to drop by more than 10% or 1 million barrels per day (bpd) last week, the Energy Information Administration said.

Fuel supplies in the world’s largest oil consumer could also tightened as its refinery crude inputs had dropped to the lowest since September 2008, EIA’s data showed.

Gold prices fell as much as 2.2% to a near one-week low on Thursday as a surge in U.S. Treasury yields and better-than-expected economic data out the United States dented demand for the safe-haven metal.

Spot gold was down 1.8% at $1,772.86 per ounce at 01:49 p.m. ET (1849 GMT), after earlier touching its lowest since Feb. 19 at $1,765.06.

U.S. gold futures settled down 1.3% to $1,775.40.

U.S. data releases were also watched carefully by global investors Thursday for more clues on the state of the American economy: initial jobless claims fell sharply to 730,000 for the week ended Feb. 20, well below the Dow Jones estimate of 845,000.