Benchmark 10-year year yields nudged lower too toward recent two-month lows.
Helping keep the disinflation fires burning was a leveling off of the latest crude oil price bounce – with crude markets now focused on the weekend OPEC+ meeting. Still down 19% in less than two months, oil prices remain in the red year-on-year.
As to Federal Reserve thinking, the central bank is expected to issue minutes of its November meeting and will be scoured for clues to next steps as always. Even though the Fed stance is clearly evolving, there’s a dearth of new data on the diary this week and the Thanksgiving holiday puts a hold on events.
The dollar continued to fall, however, with its DXY index down for the fourth day to its lowest since August. Dollar losses were broad based, but China’s yuan appeared to lead the way to its strongest level since July 27.
Markets were surprised the People’s Bank of China continued to support the yuan via its daily fixing despite the currency’s sharp gains over the past week.
Aside from speculation on peak U.S. interest rates, Chinese exporters’ year-end hedging flows, some easing of Sino-U.S. tensions and increased China economic stimulus were all cited as bolstering the yuan.
Overseas stocks, however, were relatively tame compared to the renewed fizz on Wall St.
In Europe, sterling pushed higher ahead of expected tax cuts at Wednesday’s budget speech from UK finance minister Jeremy Hunt. Britain borrowed less than predicted by its budget forecasters in the first seven months of the financial year, data showed on Tuesday – pointing to some fiscal loosening into what’s likely to be an election year.
Italy on Monday sold a 25% stake in bailed-out Monte dei Paschi di Siena, raising 920 million euros ($1 billion) and advancing plans to re-privatise the world’s oldest bank two years after a failed first attempt. Its stock fell.
