By Bill Curry
Much ado about Treasury yields
The 10-year U.S. Treasury yield rose above 3% earlier this week for the first time since early 2014. The news initially sent a chill through U.S. markets, stoking concerns over higher borrowing rates for companies already facing rising costs—and as early quarterly results in the industrials sector failed to deliver positive outlooks. U.S. stocks climbed higher on Thursday, however, after a strong round of corporate earnings reports, led by the technology sector. Also in the U.S., initial jobless claims, a measure of layoffs across the U.S., fell to their lowest levels since December 1969. The tightening job market increases the odds that the Fed will be considering additional rates hikes in 2018. Turning to oil, crude prices climbed higher early in the week as investors weighed concerns that the U.S. could withdraw from the Iranian nuclear deal—something they say could tighten global supplies. Prices declined somewhat after a meeting between U.S. President Donald Trump and French President Emmanuel Macron suggested there might not be renewed sanctions against Iran. In Canada, equity prices showed signs of life, buoyed by an upbeat economic assessment from BoC Governor Stephen Poloz, along with tentative signs of progress in the NAFTA negotiations and rising oil prices, which helped lift the energy sector. Turning to the eurozone, the ECB’s governing council left interest rates and its bond-buying program unchanged after a meeting Thursday, noting that officials want to better understand a recent slowdown in the eurozone economy before taking any new steps to phase out easy money. In response to the news, the euro fell to its lowest level since mid-January.
A week of ups and downs
It was a bumpy ride for North American equities this week. For the four days covered in this report, the Dow dropped 140 points to close at 24,322, the S&P 500 fell just 3 points to end at 2,667 and the Nasdaq declined 27 points to settle at 7,118. The TSX bucked the trend, adding 153 points to finish at 15,637.
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