Marketmind: Bonds droop as inflation cheer fades
A look at the day ahead in European and global markets from Tom Westbrook
How do you put the cork back in a bottle of champagne? Perhaps ask your friendly bond dealer, as traders in the world's deepest market quickly got over their excitement at steadying inflation, which held at 0.2% month-on-month.
Maybe markets were hoping for a surprise on the downside. Maybe a much bigger-than-expected budget deficit frightened prospective buyers, who stayed away at Thursday's 30-year Treasury auction and left the Street holding the paper.
Primary dealers took their largest slice of the sale since February. Yields went up along the curve, even if markets took the risk of another rate hike next month down a little. Stocks gave up gains and might be in need of a new source of optimism.
Data is driving markets' fine tuning of the rates outlook and today's batch brings British growth data at 0600 GMT, which is expected to show annual growth inched along at 0.2% last quarter, and U.S. producer prices and consumer confidence data.
In Asia, Treasuries went untraded as Tokyo desks closed for Mountain Day — a public holiday aimed at enjoying mountains.
Yet the U.S. dollar held gains made overnight and took the yen back near levels that prompted intervention last year.
Joe Biden had overnight called China a «ticking time bomb» because of its economic challenges. Stocks there were back under pressure during Friday, with Alibaba (NYSE:BABA) handing back gains on its solid result and property stocks sliding.
China's largest private property developer Country Garden is the focus of worry presently, as it struggles to make coupon payments, and its shares plunged to a record low on Thursday after the company forecast a $7.6 billion loss for the
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