By Dhara Ranasinghe and Wayne Cole LONDON/SYDNEY, Aug 21 Global stocks were headed for a mostly lower week on Friday, as strain in global bond markets showed little sign of abating and the diplomatic deadlock in the Gulf lifted oil prices to one-month highs.
U.S. government bond yields resumed their climb after Wednesday’s surprise intervention by the Treasury brought barely a day of relief from selling sparked by concerns about elevated inflation and fiscal pressures
The rise came even as U.S. Treasury Secretary Scott Bessent said he could further increase the government’s repurchases of Treasuries, and floated the idea of fiscal consolidation. Analysts were sceptical he could find enough spending cuts to seriously curb a budget deficit of more than 6% of gross domestic product, with interest charges alone this year running at $1.2 trillion, while the U.S. debt pile just crossed $40 trillion.
All this left the dollar heading back towards three-month lows hit on Thursday, with the greenback down almost 1% this week against other major currencies. “The initial (Treasury buyback) move was quite remarkable because it came totally as a surprise, but the big question is, ‘is this meaningful enough to have a long-lasting impact?'” said Christian Hantel, a portfolio manager at Vontobel. “We could see the market still trying to test if they’re ready to increase from the $4 billion they have announced before. So, it could be an interesting couple of days.” The U.S. 30-year bond yield was up 3 basis points at 5.266%, while the 10-year yield was up 3.2 basis points at 4.73%. Selling on Friday was heaviest in the 2-year Treasury, which was up 5 basis points for the day and 9 bps for the week at 4.236% following a stronger-than-expected U.S. purchasing managers’ report.