Stocks have been on the rise this year as the US economy continues strengthening. Bond markets are also pointing higher amid forecasts for low inflation as growth advances at a slower pace.
Friday, June 6, 2014
During the past few weeks, the S&P has established several record highs. But yield rallies tugged down 10-year notes to their lowest rates in almost 12 months, which is prompting some concern about the strong performance of the bond market. Just after noon in New York, the Nasdaq climbed 0.89%, a rise of 37.85 points to 4,289.49; the S&P 500 increased 0.57%, a lift of 10.99 points to 1,938.95; and the Dow rose 0.59%, a climb of 98.55 points to 16,836.08.
The US has been releasing economic data that is stronger than forecast, such as inflation data. Treasuries have endured reduced demand as a consequence. Ten-year notes notched 2.6% during the midweek trading session, which was the highest level since the middle of last month. Big investors are also anticipating that the U.S. will continue churning out strong economic data, according to Reuters. Consequently, the bond rally might hit a soft spot but stocks are poised to continue their progressive advance. Reuters reports the S&P is likely to notch a record year. Market gains have propelled it toward the high end of where it previously climbed. The bond market is also rising as a result of the European Central Bank's aggressive monetary stimulus.
ECB sets precedent
Thursday's global liquidity got a boost after President Mario Draghi announced the body he leads slashed the deposit rate to levels lower than zero. That marked the first time the ECB took that action. The ECB also slashed borrowing costs to a record low level of 0.15%, which is a unique move. Two other central banks are driving toward closure of intervention. The Fed is aiming to close monthly asset purchases later this year and the Bank of England is considering raising interest rates, which the body said was hinging on the advances of the labor market.
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