US bonds hold key to markets' direction
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.TREPIDATION in the markets following Friday's bloodbath was tempered over the weekend as strategists reconsidered whether fears of rising interest rates in the US were justified, writes John Willcock.
All eyes will be on the American bond market today, with optimists banking on Wall Street's recovery on Friday. Developments are expected to overshadow domestic UK indicators, including factory gate inflation figures today and manufacturing output data on Friday.
However, some expect today's inflation figures could be better than expected and help to perk up the domestic markets.
Several global strategists in the City expect Friday's Wall Street rally to spill into Europe today. The general sentiment is that it will probably be a plus day.
This leaves the question whether equities face more significant problems. Strategists feel the correction has further to go, but there is no agreement on how much further.
Sudden fear of a rise in US interest rates last week triggered the present unease. City analysts think that in the summer people were too optimistic about the US economy, whereas today they are probably too pessimistic.
There is a feeling that the rate fears are wrong but that it will take time for the markets to accept this. Meanwhile, yields on the 30-year US bond, for instance, could rise to 6.5-6.6 per cent after hitting 6.25 per cent on Friday following strong US employment figures.
There is no justification for raising interest rates anywhere outside the US, but policy-makers may be unable to resist making existing exchange rate parities a priority.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments