A gauge of global equity markets snapped a three-day losing streak to inch higher on Friday as investors sold technology shares and rotated into economically sensitive cyclical stocks in anticipation the U.S. economy will boom on pent-up demand once the coronavirus pandemic.
A strong start for world equities in 2021 after the fastest bear-to-bull market switch last year has prompted market mavens to flag worries about pricey assets, with BofA calling it the "mother-of-all asset bubbles".
Aussie hits nearly 3-yr high, sterling reaches $1.40 Euro rebounds, aided by strong factory survey data Graphic: World FX rates tmsnrt.rs/2RBWI5E (Adds new quote, chart, latest prices)
LONDON, Feb 19 (Reuters) - The Australian dollar rose to near a three-year high and the British pound scaled $1.40 for the first time since 2018 on optimism about economic rebounds in the two countries and after the U.S. dollar was knocked by disappointing jobs data.
The U.S. currency had been rising in recent days as a jump in Treasury yields on the back of the so-called reflation trade drew investors. But an unexpected increase in U.S. weekly jobless claims soured the economic outlook and sent the dollar lower overnight.
By Reuters Staff
LONDON (Reuters) -
FILE PHOTO: A Wall Street sign outside the New York Stock Exchange in New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri/File Photo
1/ YIELD JOLT
Higher U.S. Treasury yields have so far done little more than jolt equity markets off record highs. That will change if “real” yields adjusted for inflation take off.
It was last year’s real yield plunge which sent cash flooding into stocks; while expensive, they looked like a good deal compared with real yields of minus 1%.
But big-time government spending plans and prospects of economic reopening have lifted real 30-year Treasury yields to eight-month highs, just 11 basis points shy of 0%. Ten-year real yields are at five-week peaks.