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US Treasury yields fell after the release of a survey that showed US consumers’ bleak outlook on things like personal finance, economic recovery and inflation.
The University of Michigan’s consumer confidence index fell 13.5 percent in the month to mid-August, diving beyond the low reached in April 2020 when the pandemic broke out. The only other deeper fall occurred during the depths of the global financial crisis in April 2008.
“Consumers have rightly reasoned that the economy’s performance will decline in the coming months” due to the spread of the Delta variant, “but the extraordinary wave of negative economic assessments also reflects an emotional response, mainly out of lost hopes that the pandemic will soon be over. would disappear. end,” the report said.
The yield on the benchmark 10-year US Treasury bond fell 0.06 percentage points to 1.3 percent, although it was still on track for a second consecutive week of gains. Yields fall as prices rise. Gold gained 1.36 percent to $1,776 a troy ounce, while the dollar was 0.5 percent lower against a basket of currency.
Wall Street stocks floated to new heights, while European stocks headed for their longest run of record sessions in at least three decades, as strong gains outweighed concerns about the spread of the Delta variant.
The S&P 500 index of top US stocks rose 0.1 percent to a new all-time high on Friday after entertainment giant Walt Disney announced gains that exceeded expectations across the board. The company’s shares gained 2.5 percent. The tech-heavy Nasdaq Composite gained 0.1 percent.
“Stocks still have room to run in the short term, but [US] valuations have stretched to say the least,” said Andrew Patterson, senior economist at Vanguard.
“To think those levels will last indefinitely is a tough pill to swallow,” he added, noting that international markets and value stocks have more room to grow.
The frenetic pace of US consumer price growth slowed in July, according to data released on Wednesday, suggesting that at least part of the recent inflation wave could be temporary.
But investors will be looking ahead to the Jackson Hole summit of global central bankers at the end of the month, when they hope to get a clearer picture from US Federal Reserve officials on how they will interpret these numbers and recent strong jobs reports to decide. when to reverse their $120 billion in monthly asset purchases.
In Europe, the regional Stoxx 600 index rose 0.2 percent to new highs – the 10th consecutive session to hit a record. The index is heading for its longest run of all-time highs since at least 1990. Britain’s FTSE 100 gained 0.4 percent after solid second-quarter growth figures released Thursday.
Earnings in Europe were strong, giving stocks a boost to come in 11 percent so far this quarter above expectations, according to Goldman Sachs figures.
Asian markets were weaker, dented by the spread of the Delta variant of Covid-19 and Beijing’s efforts to curb key sectors of the economy, including its powerful tech companies. Hong Kong’s Hang Seng index fell 0.5 percent, with Chinese technology groups Tencent and Alibaba among the laggards, as well as the CSI 300 index of companies listed in Shanghai and Shenzhen.
China has adopted a “zero tolerance” approach to the spread of the Delta variant across the country, prompting authorities to partially close the world’s third-largest port on Thursday after a single case was identified. Worldwide shipping costs are already at record levels.
“The leadership considers the economic costs of the zero-tolerance policy to be manageable and much preferable to the uncontrolled spread of Covid-19,” said Ernan Cui, China analyst at Gavekal Research.