Bond Yields Rise as Fading Rate Bets Cause Stocks to Drop – Europe Market Wrap

Stocks fell and bond yields rose as solid US economic statistics prompted traders to reduce bets on how much the Fed will decrease interest rates this year.

Contracts for the S&P 500 declined 0.6%, while Nasdaq 100 futures fell 0.8%. The yield on 10-year US Treasury bonds climbed back to 4%, a level not seen since August, as Friday’s massive US jobs report dashed hopes of a significant rate cut in November. Money markets now predict less than a quarter-point change next month, down from a prior estimate of 50 basis points.

This might weigh on markets, which have risen to record highs on signals of a strong US economy, low inflation, and large interest rate reduction.

Meanwhile, Europe’s Stoxx 600 index is falling as signals of a weaker domestic economy emerge. The gauge fell 0.3% after German manufacturing orders plummeted the most since January. Investors are also concerned about Israel’s probable retaliation to Iran’s recent missile attack, as Brent crude prices rise beyond $79 per barrel.

In currency markets, the Dollar remained stable after rising 1.6% last week, while the Yen crept higher after newly appointed Finance Minister Kato stated that rapid currency movements harm businesses and consumers and that the government must monitor their impact.