FTSE 100 suffers biggest fall since October as bond sell-off spooks markets – as it happened
Rolling coverage of the latest economic and financial news
- Market close: FTSE 100 fell 168 points to 6483, biggest fall in four months
- Bank of England's Haldane warns of inflation tiger'
- Pound falls....bitcoin's worst week since March
- Government bond yields hit one-year high as prices slide
- Last night, Nasdaq saw worst fall in four months
9.19pm GMT
A late PS: The US stock market has closed after a volatile week, and a rather choppy day.
The Dow Jones industrial average shed 1.5% by the closing bell, dropping by 469 points to 30,932.
#MarketWrap Wall St closes mixed
DJIA -1.50%, 469.64 points at 30,932
NASDAQ +0.56%, 72.91 points at 13,192
S&P 500 -0.48%, 18.19 points at 3,811
Tech stocks lifted the broader market in another volatile session on Friday, rebounding from steep losses in the previous session.
The Dow was down 1.5%.
The S&P 500 slipped 0.5%.
The Nasdaq was up 0.6%. https://t.co/X76tu9wgqp pic.twitter.com/7Ltdc1myIS
There's no question that the path in rates today is higher," said Andrew Mies, chief investment officer at 6 Meridian.
Financials and energy shares, the best performing S&P sectors this month, slipped on Friday. Technology stocks rose and semiconductor stocks advanced.
6.54pm GMT
And finally... here's my colleague Julia Kollewe's news story about the markets today:
Global stock markets ended February deep in the red, as fears of higher inflation prompted a sell-off in government bonds and spread anxiety across financial markets.
Related: Global stock markets drop as inflation fears prompt sell-off
6.19pm GMT
The Financial Times says this has been a tough week for investors who were bullish about US government bonds (or Treasuries).
As the gentle drop in prices turned into a rush, some investors are fretting whether the sell-off will persist, and if turmoil will spread to other assets.
With expectations for rising inflation building, prices on Treasuries had been sinking for most of this month, pushing yields to their highest point since the coronavirus crisis struck markets a year ago.
But on Thursday, a shaky US government debt auction caused 10-year yields to spike as high as 1.61 per cent, ending the day with a gain of 0.14 percentage points.
5.48pm GMT
The gold price has dropped to an eight-month low this afternoon.
Gold traded as low as $1,717 per ounce, for the first time since last June.
OUCH! #Gold drops to lowest since Jun2020 as real yields keep rising. pic.twitter.com/NeZP92cEJj
Soaring yields are not good if you are bullish on gold and to a lesser degree silver, as this increases the opportunity cost of holding assets that pay no interest or dividends.
So precious metals are in danger of potentially dropping sharply next week, unless yields ease back.
Precious Metals update:#Gold 1721 -2.79%#Silver 26.27 -4.25%#Platinum 1181 -3.23%#XAUUSD #Commodities
5.42pm GMT
Back in New York, the technology-focused Nasdaq has bounced higher again.
The Nasdaq Composite is now up 197 points, or 1.5%, at 13,316 points, clawing back some of Thursday's 3.5% slump. Apple and Microsoft are both up over 2.3%.
U.S. tech stocks rebounded on the last day of a tumultuous week as a global bond rout eased, leaving the yield on 10-year Treasuries near 1.5%.
Gains for Apple Inc., Microsoft Corp. and Facebook Inc. helped lift the Nasdaq 100 about 1%. Energy producers and banks were among the worst performers, dragging down the Dow Jones Industrial Average. The dollar jumped for a second day, helping fuel a slump in commodities from oil to gold to copper.
5.21pm GMT
Sorry, there's a typo in that last post (now fixed). The pound hit a near three-year high against the US dollar earlier this week, of course:
5.13pm GMT
The pound is still down against the US dollar today too.
It's lost 0.4% or 0.6 of a cent so far today, to $1.395.
It hasn't helped that there have been conflicting comments from members of the Bank of England's MPC.
While deputy governor Dave Ramsden has said that inflation risks are broadly balanced', chief economist Andy Haldane went both barrels with his hyperbolic speech on the difficulties of taming the inflationary tiger'. This ignited the market's fears of rising interest rates, leading to the severe losses posted by the FTSE.
5.07pm GMT
European stock markets all had a poor day too, although not quite as bad as the FTSE 100.
France's CAC dropped by 1.4%, while Germany's DAX escaped quite lightly with a 0.6% drop. Italy's FTSE MIB lost 0.9%.
4.53pm GMT
Ouch. After a fairly brutal session, the FTSE 100 has closed down 168 points at 6483 points, a drop of 2.5%.
That's its biggest one-day fall in percentage terms since the end of October, I reckon, and its lowest closing point since the start of February .
4.34pm GMT
IMF managing director Kristalina Georgieva has called on the leaders of the G20 to deliver strong policies' to support the recovery.
First, speed up vaccinations across the world - it is the most impactful support for the recovery. We need international collaboration to accelerate production and make vaccines available everywhere as fast as possible.
Second, resolve to provide lifelines to business and households, tailored to countries' circumstances, until there is a durable exit from the health crisis. And prepare for risks and unintended consequences once policy support is gradually withdrawn. We are likely to see rises in bankruptcies and financial stresses, including excessive volatility in financial markets.
Press Release: IMF Managing Director @KGeorgieva Calls for Strong #G20 Policies to Counter Dangerous Divergence' https://t.co/FBAg7u4ias pic.twitter.com/SMvQhXbyYG
4.13pm GMT
Professor Costas Milas of the University of Liverpool points out that the Bank of England doesn't have an infallible record of forecasting inflation....
BoE policymakers have different views about inflation. Andy Haldane sees' an inflation threat whereas Dave Ramsden thinks that inflation risks are broadly balanced. One way of resolving this is to assess the MPC's collective judgement. I plot actual inflation together with the one-year and two-year ahead BoE forecasts. Since 2006, the median bias of the one-year ahead forecast is almost zero (equal to 0.02) whereas the median bias of the two-year ahead forecast is slightly negative (i.e. -0.17). So far so good, you could say. Not at all!
The correlation between actual inflation and the one-year ahead forecast is very weak (only +0.17). The correlation between actual inflation and the two-year ahead forecast is negative (-0.34), that is, inflation moves in opposite direction to the forecast. Therefore, I wouldn't feel very confident about the Bank's collective judgement on inflation risks...
4.02pm GMT
Takeover news: The French family behind Louis Vuitton and Christian Dior is to take control of the German sandal maker Birkenstock in a deal thought to be worth 4bn (3.5bn).
Related: German sandal maker Birkenstock taken over by LVMH-backed group
3.52pm GMT
Sainsbury's and Argos workers are to receive a third pandemic bonus and a pay increase of more than 2% to match the real living wage outside London, as supermarket sales continue to boom during the high street lockdown.
Minimum hourly pay for Argos workers outside London will rise from 9.00 to 9.50 from March, and from 9.30 to 9.50 for Sainsbury's staff. Pay for Sainsbury's staff in central London will rise from 9.90 to 10.10, still short of the independently calculated living wage of 10.85...
Related: Sainsbury's and Argos workers to get pay rise and third Covid bonus
3.43pm GMT
European stock markets are lurching deeper into the red, as Wall Street's earlier rally fades and government bond yields rise.....
The FTSE 100 is now down a hefty 2.4% in late trading, a drop of 160 points to 6491 points - and on track for its worst day of 2021 so far.
Don't freak out, but 7-year Treasury yields are now higher on the day. pic.twitter.com/RAd1CIJnia
10-year treasury yields today. $tsla pic.twitter.com/i0PcsPYMWl
3.20pm GMT
US consumer sentiment has hit a six-month low, according to the University of Michigan's monthly healthcheck.
It has fallen to 76.8 in February, from 79 in January, and the lowest reading since last August.
The University of #Michigan's #Consumer #Sentiment for the US was revised higher to 76.8 in February of 2021 from a preliminary of 76.2. Figures compare with market forecasts of 76.5 and 79 in the previous month. It remains the lowest reading in 6 months.#DGCX #FOREX #FUTURES pic.twitter.com/gUCMKX5Mxz
Michigan Consumer Sentiment: February Final Slightly Lower https://t.co/iGLa1KVlUK pic.twitter.com/caMS0YdZMw
U Michigan consumer sentiment 2.8pt to 76.8 in February
Current Economic Conditions 86.2 (0.6%)
Consumer Expectations 70.7(4.5%)
"All of [the] loss was due to households w/ incomes below $75,000, with the declines mainly concentrated in future economic prospects" pic.twitter.com/3WCWLTY4ZH
2.59pm GMT
Back in London, the FTSE 100 is sliding further into the red as the weekend approaches.
The blue-chip index is now down 133 points, or 2%, at 6519 points - its lowest level in a fortnight.
2.41pm GMT
After a torrid session yesterday, US stocks have opened more calmly.
Technology stocks are rallying, lifting the Nasdaq index up around 1.2%, or 158 points at 13,278 points.
#Treasury yields taking a breather, #DOW -40 #NASDAQ +137 rebounding from its worst day since October
2.08pm GMT
Hello.....Bank of England deputy governor Dave Ramsden doesn't seem to believe that inflation is a hungry, sharp-toothed tiger, poised to pounce on complacent central bankers.
Unlike his colleague Andy Haldane, Ramsden reckons inflation risks are broadly balanced.
Bank of England Deputy Governor Dave Ramsden said on Friday that risks to inflation were broadly balanced and described the expectations for prices as well-anchored.
I would still see the risks broadly tilted to the downside - that's for activity. Inflation: the risks are broadly balanced," Ramsden said following a speech to the Institute of Chartered Accountants in England and Wales.
#UK #monetary policy - #Ramsden comments on #inflation contrast somewhat with #BOE's chief economist Andy #Haldane concerns stated in an earlier speech today. BoE's Ramsden says #UK inflation risks are balanced #BankofEngland https://t.co/9oG6WoLc3V
The UK is now much better placed to deal with the failure of a UK bank. We have a resolution regime built on robust and coherent principles. As of now the UK banks are on track, as they should be 12 years after the end of the Global Financial Crisis, but it is vital that momentum is sustained.
As and when - for it is ultimately not likely to be an if' - we are called upon to use our powers to address a bank failure, we can be confident that the options available and outcomes arising will be superior to the alternatives and past experience.
1.51pm GMT
Over in the US, consumer spending has jumped as the latest stimulus payments reached families.
Consumer spending rose by 2.4% last month, the Commerce Department reports, driven by spending on goods such as recreational goods and vehicles (notably, information processing equipment), food and beverages.
Jan personal income +10% vs +9.5% est, spending +2.4% vs +2.5% est; Core PCE Y/Y +1.5% vs +1.4% est #economy #markets #trading pic.twitter.com/bJ9EYnEJl5
1.36pm GMT
Nomura analysts George Buckley and Chiara Zangarelli suggest that the markets may be getting ahead of themselves by pushing up government bond yields so sharply.
They predict that output will contract across most of Europe in the current quarter.
UK PM Johnson announced a roadmap back to normality this week, but are the markets getting ahead of themselves? Bond yields are up over 30bp from recent lows in Germany and Italy, and over 50bp in the UK, driven by US Treasuries.
The ECB's concerns are palpable, with Mme Lagarde noting the importance of the level of nominal yields, Chief Economist Lane saying that it could be problematic" if markets move ahead of economic reality and Executive Board member Schnabel suggesting more monetary support may be needed if higher yields damage the recovery.
1.04pm GMT
It's been a bad week for bitcoin, too.
The cryptocurrency is on track for its biggest weekly fall since the market crash back in March, nearly a year ago.
Short-term movements like the current BTC correction are associated with the psychology of the crowd: some investors have decided to withdraw their profit. Also some funds investing in bitcoin are experiencing a massive outflow of money in recent days. It indicates a temporary increase in bitcoin sales but shouldn't be considered as a global reverse of the growing trend in cryptocurrencies."
Gold peaked in August and also looked quite overbought. Then we saw a series of disappointing reports on the cooling demand for it after the boom in 2020. At the same time, the rise in bond yields reduced the attractiveness of investing in low-profit gold," he concludes.
12.31pm GMT
UK government bond prices have weakened again this morning, pushing up yields.
That puts gilt yields on track for their biggest jump in over 10 years, Reuters reports.
Ten-year gilt yields rose to 0.835%, 4 basis points up on the day, after Bank of England Chief Economist Andy Haldane warned that an inflationary tiger" might be on the loose which could require more BoE action than markets expect.
If 10-year yields close near this level, they will have risen more than 50 basis points in February, the biggest monthly jump in yields since January 2009 when markets judged they had passed the low-point of the global financial crisis.
12.17pm GMT
The sell-off has intensified, with the FTSE 100 share index now down by 1.4%.
Anxiety about the sell-off in the government bond market, and the jump in yields, has knocked 93 points off the blue-chip index, back down to 6558 .
The rapid rise in yields this week has come despite a perfectly competent performance from Fed Chair Jerome Powell in front of the Senate Banking and House Financial Services Committees. He gave his best assurances and it's seemingly fallen on deaf ears.
I expect we'll see a lot more of this from central banks in the coming weeks if stock go into freefall. Despite a couple of days of losses, we're very much not in that territory yet - this is not a taper tantrum - and policy makers may be perfectly comfortable with what's happening.
12.02pm GMT
Here's some reaction to Andy Haldane's speech on inflationary tiger-taming, from the Independent's Ben Chu:
"Tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets" says Bank of England's Andy Haldane https://t.co/UWoE7rquKl
Consistent with his view that consumer spending will take off by more than assumed this year (& Bank's most recent projection of relatively small UK output gap).
Though all very much at odds with views expressed by external MPC members in recent days
1/ @bankofengland chief economist Andy Haldane can't be British. He must be German. And he can't be only 53 years old. He must be more like 103 years old. Because he fears uncontrollable inflation. Like the hyper-inflation Germany suffered in the 1920s.
2/ In a speech today he says @bankofengland may need to tighten policy to tame the Tiger of inflation. "There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets."
3/ @bankofengland said after the 2008 financial crash it said rising wages would spark inflation, forcing it to increase interest rates. Wrong. In 2011 inflation jumped to 5.2%, but only because commodity prices increased. Rightly the BoE ignored then. It will ignore it now
12.00pm GMT
The Bank of England's chief economist, Andy Haldane, has now weighed in -- warning that inflation may be hard to tame as the recovery gathers pace.
In a speech titled Inflation: A Tiger by the Tail?", Haldane says central bankers face a difficult and dangerous' task to ensure prices stability during the recovery.
Friedrich von Hayek once referred to inflation control as akin to trying to catch a tiger by its tail. That metaphor seems apt today. For many years, the inflationary tiger slept. The combined effects of unprecedentedly large shocks, and unprecedentedly high degrees of policy support, have stirred it from its slumber. In this environment, the tiger-taming act facing central banks is a difficult and dangerous one.
Inflation is the tiger whose tail central banks control. This tiger has been stirred by the extraordinary events and policy actions of the past 12 months. It is possible that, as vaccinations are rolled out and some degree of normality returns, inflation will return to a stable state of rest. Indeed, if risks from the virus or elsewhere prove more persistent than expected, disinflationary forces could return.
But, for me, there is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets. People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely.
The future path of inflation is uncertain. In this speech, Andy Haldane explores the forces that could lead it to be higher, or lower, than expected over the coming years. https://t.co/i1wkqlROJ0 pic.twitter.com/178lrBXI61
11.02am GMT
The jump in bond yields comes just as chancellor Rishi Sunak finalises next week's budget.
Borrowing costs are still very low in historic terms -- Britain can borrow at below 0.8% a year for the next decade (compared with around 5% before the financial crisis in 2008). That still means it's a good time to borrow to invest in the future, and repair the damage of the pandemic.
As the UK ten-year Gilt yield reaches 0.75%, the UK's borrowing costs look like they are about to break a 25-year downtrend at a particularly inconvenient time, something that will have Boris Johnson and Rishi Sunak a little on edge.
10.46am GMT
Precious metal prices have also been hit, with gold, silver and platinum prices all down.
Gold touching an eight-month low ($1,755 per ounce) earlier this morning before a small rebound.
Weakness in metals continues:#Gold 1763 -0.43%#Silver 2685 -2.13%#Platinum 1207 -1.08%#XAUUSD #Commodities
10.21am GMT
The drop in the pound has helped the FTSE 100 claw back some of its earlier losses.
The blue-chip index is now down 0.5%, or 30 points, with multinationals such as Reckitt Benckiser (+2.2%) and pharmaceuticals groups AstraZeneca (+1.7%) and Hikma (+1.2%) in the risers column.
We've got very strong liquidity going into 2021...so no we will not need additional funding,"
Two trades to watch: S&P500, GBP/USD#GBPUSD #SPX #Bondrout pic.twitter.com/TpjRbsAhHO
9.52am GMT
Here's Bloomberg's take on yesterday's bond market drama:
After weeks of grumbling, the world's biggest bond market spoke loud and clear Thursday -- growth and inflation are moving higher. The message wreaked havoc across risk assets.
Benchmark 10-year Treasury yields catapulted to the highest in more than a year at over 1.6% and traders yanked forward their opinion of how soon the Federal Reserve will be forced to tighten policy. Equities tumbled, as higher borrowing costs put pressure on soaring valuations.
In a flash, U.S. yields hit 1.6% - and wreaked havoc across markets https://t.co/DtrCexTqAW via @mccormickliz @kgreifeld @xieyebloomberg pic.twitter.com/V6or69GXe7
9.46am GMT
Mark Dowding, CIO at BlueBay Asset Management, reckons we could see more market volatility next month, if the rise in bond yields continues.
The direction of government bond yields will hold the key to broader market direction, he explains:
9.32am GMT
The ECB's chief economist, Philip Lane, has also weighed in, saying the Bank is carefully monitoring the rise in bond yields.
Lane told Spanish business newspaper expansion Expansion that the ECB could adjust its bond-buying programme, if needed:
This is the paradox of the financial markets and the overall economy. It can be problematic if market optimism moves ahead of the current state of the economy. We are carefully monitoring the rise in yields. These questions all come into sharp focus, especially when we have a new inflation forecast. In any case, it's important to remember that our pandemic emergency purchase programme (PEPP) will be used flexibly in response to market conditions.
At this stage, an excessive tightening in yields would be inconsistent with fighting the pandemic shock to the inflation path.
But at the same time, it is crystal clear that we are not engaged in yield curve control, in the sense that we want to keep a particular yield constant".
(THREAD) In the second quarter the economy will already start to recover, says Chief Economist Philip R. Lane in an interview with @expansioncom. The timing of this rebound will depend on how the public health situation develops https://t.co/9ja4Urqp8Y 1/3
Lane on yields: We are carefully monitoring the rise in yields and will conduct our bond purchases flexibly, if necessary 2/3
Lane on fiscal policy: The challenge in the near term is not the level of debt. The challenge now is to ensure that the economy makes it through the pandemic with as many workers and firms as possible in good shape, and in having a sustained recovery 3/3
*Schnabel Says ECB May Need to Add Support if Yields Hurt Growth
*LANE: 'WITHOUT A DOUBT' ECB HAS MORE AMMO IF ANOTHER SHOCK
The periphery screams for help. Yesterday #Greece 10y yields rose the most since March 2020, #Italy 5-year BTPs auction was weak. @SaxoStrats @saxobank pic.twitter.com/LKglwjBBDm
9.27am GMT
Isabel Schnabel, executive board member of the European Central Bank, has signalled that the ECB could provide more support, if rising bond yields undermine the eurozone recovery.
In a speech in Frankfurt this morning, Schnabel pointed out that a pick-up in yields can be a positive development if it reflects improved inflation and growth expectations. But, she adds, they need to be monitored closely.
For example, a rise in nominal yields that reflects an increase in inflation expectations is a welcome sign that the policy measures are bearing fruit. Even gradual increases in real yields may not necessarily be a cause of concern if they reflect improving growth prospects.
However, a rise in real long-term rates at the early stages of the recovery, even if reflecting improved growth prospects, may withdraw vital policy support too early and too abruptly given the still fragile state of the economy. Policy will then have to step up its level of support.
Isabel Schnabel of the ECB speaking now
*SCHNABEL: ECB MAY NEED TO ADD SUPPORT IF YIELDS HURT GROWTH
*SCHNABEL: ECB STILL HAS 'SOME ROOM' TO CUT INTEREST RATES
*SCHNABEL: RISE IN REAL LONG-TERM RATES MAY HURT RECOVERY
(1/3)
9.05am GMT
The bond sell-off may be easing....
The yield on US 10-year Treasury bonds has dropped back from yesterday's one-year high (meaning prices are rising).
U.S. 10-year treasury yields down 6 bps at 1.45% vs 1.53% earlier pic.twitter.com/VMIr3WhfHm
8.40am GMT
The owner of British Airways, International Airlines Group, has reported a record 7.4bn loss for last year, and called for the introduction of digital health passes for passengers to enable the airline industry to get back on its feet.
The group continues to reduce its cost base and increase the proportion of variable costs to better match market demand. We're transforming our business to ensure we emerge in a stronger competitive position."
Related: British Airways owner IAG hit by record 7.4bn loss
8.36am GMT
Sterling has also been dented by the rush away from riskier assets.
The pound has dropped by three-quarters of a cent against the US dollar to $1.394, away from the three-year highs seen this week (over $1.42).
Rising yields in the US, European and Japanese debt markets have sharply reduced risk assets' attractiveness.
Currencies and emerging markets were hit especially hard yesterday. Currencies such as the Mexican peso, South African rand and Turkish lira lost more than 3% intraday.
8.25am GMT
European stock markets have also begun Friday with a bump.
The Europe-wide Stoxx 600 index has dropped by almost 1.5%, with Germany's DAX and France's CAC both down around over 1.2%.
8.18am GMT
8.15am GMT
The London stock market has opened in the red, with the blue-chip FTSE 100 index down 60 points, or 0.9%, at 6590.
Scottish Mortgage Investment Trust, which holds stakes in US tech giants, is the top Footsie faller (-2.75%), followed by online takeaway service Just Eat (-2.6%).
8.05am GMT
The big worry is that the jump in US government bond yields triggers wider turmoil in other asset classes.
Bloomberg's John Authers has written a great piece on this overnight. He points out that the tantrum' in the bond market can have knock-on effects across the financial word.
First, the bond market is central to setting interest rates for Americans' mortgages. In proportionate terms, the shock to the Fannie Mae 30-year mortgage generally used as a benchmark for U.S. home loans was truly historic. Outside of one day during the worst of the 2008 crisis, and two days during the Covid shock last spring, it was the biggest percentage rise in mortgage rates on record:
Higher U.S. rates are generally held to be bad news for emerging markets, as they attract flows away from the sector, and also tend to strengthen the dollar. That in turn can weaken emerging markets that are particularly reliant on dollar-denominated debt.
The critical question at what point bond yields become too high for stocks to bear, and cause them to fall.
The mantra for the last year, as equities have enjoyed their remarkable post-Covid rally, is that stocks remain cheap compared to bonds. This is true, but the people excitedly buying stocks on this basis might be forgetting that the situation can also be corrected by a fall for bonds, and not just by a rise for equities.
The great concern of the Treasury tantrum is the impact that further rises in bond yields could have on other asset classes, https://t.co/aCNI12oX0U via @bopinion pic.twitter.com/e7WNG4Gobi
7.51am GMT
Bond yields rise when prices fall" is a mantra that became familiar during the eurozone debt crisis, when Greece and Italy's borrowing costs rose to dangerous levels, triggering bailouts.
During the Covid-19 pandemic, government bond yields fell to record lows, and this week's rises don't imply worries about countries defaulting, of course. Instead, it's being driven by the prospect of better economic growth, and a resulting shunt upwards in inflation.
Yesterday proved to be nothing short of a rout in global markets, with the selloff in sovereign bonds accelerating as investors looked forward to the prospect of a strengthening economy over the coming months. Matters weren't helped either by stronger-than-expected economic data, which only added to the fears that the Fed could withdraw stimulus sooner than anticipated, and helped Treasury yields see their biggest daily rise since March.
On top of this, there were quite obvious signs that the sharp move higher for bond yields was beginning to bite elsewhere, with US equities falling across the board and tech stocks in particular suffering big losses as investors reassessed whether current equity valuations could still be justified in a higher-yield environment.
Bond yields could still go higher in the short term though as bond selling begets more bond selling.
The longer this continues the greater the risk of a more severe correction in share markets if earnings upgrades struggle to keep up with the rise in bond yields."
7.29am GMT
The market turmoil has been triggered by a whiplash' in bonds, says Reuters:
Asian stocks fell by the most in nine months on Friday as a rout in global bond markets sent yields flying and spooked investors amid fears the heavy losses suffered could trigger distressed selling in other assets.
In a sign the gloomy mood will reverberate across markets, European and U.S. stock futures were a sea of red. Eurostoxx 50 futures lost 1.7% while futures for Germany's DAX and those for London's FTSE dropped 1.3% each.
Yields on the 10-year Treasury note eased back to 1.538% from a one-year high of 1.614%, but were still up a startling 40 basis points for the month in the biggest move since 2016.
7.23am GMT
Stock markets across the Asia-Pacific region have fallen sharply today, following Wall Street's lead overnight.
Japan's Nikkei fell 4% to 28,966 points, Hong Kong's Hang Seng is down around 3.4%, and Australia's S&P/ASX 200 index has lost 2.35%.
With the US economic outlook boosted by pandemic improvement, vaccine distribution and the prospects of President [Joe] Biden's fiscal package getting through the Congress, investors are now fixated on the risk of inflation and economic overheating."
7.01am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Global Bond Market rout pic.twitter.com/5A3tn7cRvC
Bond yields pushing higher around the globe with the U.S. and U.K. leading the way pic.twitter.com/UUnR9eCZeV
U.S. stocks fell sharply Thursday as an outsized surge in bond yields spooked investors, who rushed to dump risk assets, especially high-flying technology names.
The Dow dropped 1.8%.
The S&P 500 fell 2.5%.
The Nasdaq tumbled 3.5%. https://t.co/l6Ut7bjPJL pic.twitter.com/7w51yeFWwT
European Opening Calls:#FTSE 6584 -1.03%#DAX 13724 -1.12%#CAC 5712 -1.24%#AEX 653 -1.69%#MIB 22776 -1.25%#IBEX 8229 -1.07%#OMX 2011 -1.35%#STOXX 3636 -1.33%#IGOpeningCall
Investors dropped their sovereign bond holdings like a hot potato as all new piece of data pointed at improvement in economic conditions and called for rising inflation.
Equities dived along with the sovereign bonds. Nasdaq led losses with a sizeable 3.52% drop as tech stocks fell big as a result of a mass migration from growth to value stocks. Nike, Caterpillar, Johnson & Johnson and Goldman Sachs were among the rare stocks finishing the session higher. Apple, Microsoft and Disney fell, as Tesla shed 8%.
European stock futures slide over 1% as surging bond yields roil equity markets https://t.co/lhMXgmeP9n pic.twitter.com/WOVh4y6lA6
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