World stocks and US Treasury yields rose yesterday ahead of an impending speech by Federal Reserve Chair Janet Yellen on monetary policy, while the US dollar steadied against a basket of key currencies, stabilizing above its lowest in more than three weeks.
A gauge of global equity markets ticked higher, lifted by energy stocks, as Brent crude oil prices jumped to a fresh seven-month high following Friday’s sharp slide in the dollar.
The greenback, which suffered its biggest one-day drop against a basket of major currencies in four months on Friday after a poor payrolls report, was last down 0.02 per cent at 94.007.
On May 27, Ms Yellen said a rate increase might be appropriate in the coming months if the economy and jobs market improve further.
“After Friday’s data, markets are clearly interested in any change in her message from two Fridays ago,” ScotiaBank analysts wrote in a research note.
World equity markets were higher, and the MSCI’s all-country world equity index was up 0.57 per cent, on pace for its third session of gains.
On Wall Street, the Dow Jones industrial average was up 99.44 points, or 0.56 per cent, at 17,906.5, the S&P 500 was up 9.5 points, or 0.45 per cent, at 2,108.63 and the Nasdaq Composite added 19.03 points, or 0.39 per cent, at 4,961.55.
Europe’s broad FTSEurofirst 300 index was up 0.51 per cent at 1,346.36, bolstered by gains in major mining and oil company shares, including Anglo American, Rio Tinto and BHP Billiton.
In the US Treasury market, yields rose as investors evaluated whether the weak jobs report for May would make it less likely for the Fed to raise rates in the coming months. Higher rates could curb spending and investment by individuals and companies, possibly hurting economic growth.
Rising yields yesterday likely reflected stronger risk sentiment as stocks gained, rather than expectations that Ms Yellen would strike a more hawkish tone, said Thomas Simons, a money market economist at Jefferies in New York.
“It’s a general ‘risk-on’ tone a little bit, but I don’t think there’s a lot of conviction behind that because there are more people on ‘wait-and-see’ mode than are willing to stick their neck out,” he said.
Benchmark 10-year notes fell 6/32 in price to yield 1.725 per cent, up from a two-month low of 1.697 percent on Friday.
Brent crude oil prices rose above $50 a barrel to their highest since early November, lifted by Friday’s dollar weakness that could spur demand just as attacks on Nigerian oil infrastructure tightened supplies.