* European Stoxx 600 down 0.8%
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June 21 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
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MYSTERIOUS WAYS (0714 GMT)
Bond investors could be forgiven for humming U2's signature
tune after the strange moves in the U.S. Treasury yield curve in
the wake of the Federal Reserve catching markets off guard last
week by anticipating rate hikes as early as 2023.
Consider this: 2-year U.S. Treasury yields are near 16-month
highs while 30-year debt yields are near 2021 lows. The 5
year-30 year yield curve saw the largest one-week flattening in
nearly ten years, says Deutsche Bank. It is unnatural for U.S.
long-end yields to decline and the curve to flatten after a
hawkish Fed meeting before a hiking cycle has even begun.
Whether the U.S. bond market moves signal a
weaker-than-expected global economic recovery or too much
hawkishness being priced in at the front end of the curve,
markets are clearly in risk-off mode.
U.S. and European stock futures are in the red after a weak
Wall Street close while safe-haven currencies including the
Japanese yen are in demand.
There is plenty of food of thought for investors this week
with a swathe of flash business surveys from the world’s major
economies on Wednesday offering more clues into whether the
economic recovery is proving as strong and rapid in June as it
did in previous months.
Several Fed officials speak this week, including Chair
Jerome Powell, who testifies before Congress on Tuesday.
Investors will watch if the Bank of England becomes the latest
central bank to signal further steps on the path to tapering
pandemic-era stimulus after the Federal Reserve’s hawkish tilt
last week.
Bitcoin was nursing overnight losses while the Australian
dollar fell to seven-month lows driven by a steep drop in iron
ore prices. Inflationary signals were mixed from the commodities
markets with copper nursing losses while oil climbed above $72 a
barrel.
In corporate news, Billionaire investor William Ackman's
Pershing Square Tontine Holdings signed a deal to buy 10% of
Universal Music Group (UMG), Taylor Swift's label for about $4
billion while Goldman launched its transaction bank in Britain.
Key developments that should provide more direction to markets
on Monday:
Copper prices at two-month lows after near 9% drop last week
ECB’s Lagarde speaks to women political leaders’ summit
Fed speaker corner: Bullard, Kaplan
Emerging markets: U.S. National Security Advisor Jake Sullivan
says Washington readying another package of sanctions against
Russia
(Saikat Chatterjee)
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EUROPE IN THE RED AFTER HAWKISH FED (0528 GMT)
The European stock futures fell as Wall Street and Asian
stock markets showed a significant adverse reaction to last
week's Federal Reserve sudden hawkish turn.
Investors brace themselves ahead of Fed speakers due this
week after St. Louis Fed President James Bullard spooked markets
on Friday by saying a faster tightening of monetary policy is a
"natural" response to economic growth and quicker inflation.
A correction of equities doesn't come as a surprise after
their strong run for such an extended period, with analysts
flagging that, as of now, market action is not disorderly.
(Stefano Rebaudo)
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