Stocks hurt by U.S. 10-year yield's climb back near 5%, earnings misses
By Alun John
LONDON (Reuters) — U.S. Treasury yields were heading back towards 5% on Thursday, dragging shares around the world to multi-month lows in the middle of a busy week for corporate earnings, with an ECB meeting and the release of U.S. GDP to come later in the day.
A rebound in U.S. home sales and an auction of five-year notes that showed weak demand were the latest trigger for concern in the bond market, which saw the U.S. 10-year Treasury yield rise 11 basis points on Wednesday.
That move continued on Thursday, with the benchmark yield reaching 4.989%, challenging the 5.021% — the highest since 2007 — hit earlier in the week. [US/]
«The Treasury market is clearly very much top of mind, the big back-up in yields yesterday appeared to have quite a negative impact on equities as well, so how that evolves and how it reacts to data we have this week will be the big swing factor for global markets,» said Kiran Ganesh, global head of investment communications at UBS Wealth Management.
U.S. third-quarter GDP, released later on Thursday, is unlikely to provide help for the bond market as it is expected to show the U.S. economy grew at its fastest quarterly pace in two years, and so offer nothing to derail expectations the Federal Reserve will keep rates high for longer.
Friday's personal consumption expenditure (PCE) price index, the Fed's preferred inflation gauge, is also top of mind, as is Thursday's European Central Bank meeting, at which the bank is expected to snap a 15-month streak of hikes but keep rates at record highs.
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Europe's broad STOXX index was down 0.8%, just off seven-month lows hit earlier in the week, and MSCI's broadest index of Asia-Pacific shares outside Japan hit an 11-month
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