A bigger conundrum for investors is how to play U.S. Treasuries right now – caught between seeing sovereign bonds as a haven in times of global conflict and the increasingly hawkish stance of the Federal Reserve.
Two-year Treasury yields <US2YT=RR> are testing 5% again – little over quarter of a percentage point below where the Fed policy rate of 5.25-5.50% currently stands. They fell back only briefly on the strike on Iran earlier and stand at 4.97% ahead of today’s bell.
To the irritation of some other major central bankers attending the International Monetary Fund meetings in Washington this week, Fed officials continue to signal they are in no rush to cut interest rates this year as they snuff out stubborn vestiges of the recent inflation spike.
“I definitely don’t feel urgency to cut interest rates,” New York Fed boss John Williams said on Thursday.
The ongoing strength of the U.S. labor market and business activity was visible again on Thursday in sub-forecast weekly jobless claims and a Philadelphia Fed survey ahead of expectations.
The European Central Bank, by contrast, seems nailed on to start cutting its policy rates as soon as June.
In the corporate world, Big Tech is replacing the banks on the top of the earnings diary but the reaction to the updates is unsettling there too.
With geopolitical concerns of its own, Taiwan’s main bourse was the big underperformer overnight and dropped almost 4%. TSMC’s Taipei-listed shares tumbled almost 7% on Friday following the company’s first-quarter earnings report in which it dialed back its expectations for chip sector growth and did not revise up its capital spending plans.
Video giant Netflix’s shares fell after the bell on Thursday after it unexpectedly announced it will stop reporting subscriber numbers each quarter, seen as a sign that years of customer gains in the streaming wars are coming to an end.
Even though it reported a surprisingly large 9.3 million new customers for the first quarter, Netflix gave a revenue forecast that missed analyst targets.
Electric vehicle behemoth Tesla continues to alarm investors, with its shares down 2% again ahead of Friday’s bell and after five straight declines that have seen them lose almost 40% for the year so far to a 15-month low.
There was better news for some of Europe’s leading firms, with shares in L’Oreal jumping 5% after the beauty company posted a nearly 10% rise in first-quarter sales on a like-for-like basis.
