US stocks extend gains as Treasuries recover
New York: US stocks advanced as Treasury yields erased most of their climb, with financial markets looking to stabilize after the worst week in two years for American equities.
The S&P 500 Index set new session highs as the 10-year yield fell back from the four-year high hit earlier on Monday. Stocks and bonds have been in a tug-of-war since a blowout jobs report sent Treasury yields spiking, raising the spectre of higher interest rates this year. The subsequent sell-off that wiped $2 trillion from US stocks sparked demand for the haven of fixed income, driving yields back down.
The Cboe Volatility Index edged lower, but traders were still on edge following the tumultuous move in equities last week. Investors are awaiting US consumer-price data due Wednesday with some trepidation, given that pressure on equities has been emanating from the Treasury market and the outlook for inflation.
“The base case here is that the fundamentals are just as good as they were in January, before the volatility started,” said Michael Purves, the chief global strategist at Weeden & Co. “But the surface is going to be choppier.”
European and Asian equities rose Monday, while the dollar’s slide supported commodities, with metals higher and crude oil rallying after a six-day sell-off.
The won outperformed major currencies after vice-president Mike Pence told the Washington Post the US is ready to engage in talks about North Korea’s nuclear programme, signalling a shift in policy. South Africa’s rand strengthened on speculation President Jacob Zuma is poised to leave office.