(Bloomberg) — US stocks turned higher in early trading, while Treasuries held steady despite producer price data keeping pressure on the Federal Reserve to tighten policy. UK markets were roiled once again by policy concerns.
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The S&P 500 rebounded, staging a comeback after a five-day slump. The tech-heavy Nasdaq 100 outperformed. Treasuries were little changed, with the policy-sensitive two-year yield holding near 4.3%. The dollar was steady.
Data showed prices paid to US producers rose in September by more than expected ahead of a key measure of consumer inflation due Thursday that’s set to return to a four-decade high.
The yield on 30-year gilts rose above 5% after the Bank of England confirmed its plan to end emergency bond purchases, but the pound rallied above $1.10. The BOE also signaled interest rates are likely to rise sharply in November and warned that some UK households may face a strain over debt repayments that’s as great as before the 2008 financial crisis.
“The Bank of England is a test case for how hawkish central banks can be without doing damage to financial stability,” said Michael Metcalfe, global head of macro strategy at State Street Global Markets.
Kristina Hooper, chief global market strategist for Invesco, said in a note that while world economy is slowing after rate hikes, there’s yet to be a meaningful decline in inflation.
“This is an extraordinary monetary policy tightening environment and we are waiting to see if something breaks globally,” she said. “The UK has come close.”
In Europe, UK banks underperformed, while Credit Suisse Group AG slumped after a report that US authorities are investigating whether the bank helped clients hide assets. LVMH rose after its quarterly sales jumped, with a strong dollar pushing US tourists to splurge on luxury items.
Elsewhere, crude fluctuated. OPEC slashed projections for the amount of crude it will need to pump this quarter, while Russia’s President Vladimir Putin said any energy infrastructure in the world is at risk after the explosions on the Nord Stream pipelines.
NATO Secretary General Jens Stoltenberg urged alliance members to step up supplies of air defense systems to Ukraine, condemning Russian strikes. In China, Shanghai is quietly shutting down schools and a raft of other venues as officials try to rein in a flareup that’s hit the financial hub.
Key events this week:
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Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
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FOMC minutes for September meeting, Wednesday
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Fed’s Michelle Bowman and Neel Kashkari speak
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ECB’s Christine Lagarde speaks
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US CPI, initial jobless claims, Thursday
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G-20 finance ministers and central bankers meet, Thursday
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China CPI, PPI, trade, Friday
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US retail sales, business inventories, University of Michigan consumer sentiment, Friday
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BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.4% as of 9:44 a.m. New York time
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The Nasdaq 100 rose 0.7%
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The Dow Jones Industrial Average rose 0.4%
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The Stoxx Europe 600 fell 0.6%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $0.9706
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The British pound rose 0.7% to $1.1043
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The Japanese yen fell 0.6% to 146.77 per dollar
Cryptocurrencies
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Bitcoin rose 0.6% to $19,132.33
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Ether rose 1.5% to $1,300.5
Bonds
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The yield on 10-year Treasuries declined one basis point to 3.93%
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Germany’s 10-year yield advanced eight basis points to 2.37%
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Britain’s 10-year yield advanced 15 basis points to 4.59%
Commodities
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West Texas Intermediate crude fell 1.5% to $88.01 a barrel
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Gold futures fell 0.6% to $1,676 an ounce
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