But the worst of the selling in bonds and stocks this week, which may have been partly related to the quarter end and a heavy U.S. Treasury auction schedule, seemed to ease somewhat.
It’s hard to identify any particular reason for the mini-bounce, but the circular nature of the week’s oil, bond, dollar and stock market moves seemed to reverse at bit.
U.S. crude oil prices fell back from the year’s highs above $95 per barrel – and hovered just under $92 on Friday as traders looked to next week’s ministerial meeting of the Organization of the Petroleum Exporting Countries and allies for further clues on tight global energy supplies.
That helped take the heat out of Treasury yields. Ten-year yields fell back from fresh 16-year highs, just as a heavy week of new government debt sales totalling more $130 billion came to an end with Thursday’s underwhelming $37 billion auction of oft-unloved 7-year notes.
At 4.53% on Friday, the 10-year benchmark was some 15 basis points off Thursday’s peak and two-year yields fell back to their lowest since Sept. 18.
The recoil in oil and bond yields in turn dragged the dollar back down too – with the index now off more than 1% from Wednesday’s high for the year.
And stocks breathed a sigh of relief too.
Wall Street indexes managed a second day of gains on Thursday and S&P500 futures were about 0.5% higher ahead of the open. The VIX volatility gauge fell back sharply to 16.5.
World stocks captured by MSCI’s all-country index also broke a 9-day losing streak on Thursday and were up for the second day as the week closed out ahead of China’s Golden Week break next week.
Some optimism from Beijing about a possible year-end summit between President Xi Jinping and U.S. President Joe Biden helped. U.S. and China are discussing a possible trip to Washington by Xi’s top economic-policy aide, Vice Premier He Lifeng, the Wall Street Journal reported, and this could pave the way for Xi’s trip to the U.S. in November.
