Stocks and bonds churn as BOJ rattles traders: Markets wrap

Stock and bond markets fluctuated, while the yen surged the most in three months amid renewed speculation that the Bank of Japan will soon scrap the world’s last negative interest-rate regime.

S&P 500 futures were little changed and 10-year Treasury yields added five basis points. The yen strengthened 1.6% against the dollar and Japanese bonds sold off sharply, with the rate on the 10-year note jumping 12 basis points.

The move was another jolt to the global government rally, raising further doubts that central banks are ready to pivot toward rate cuts. In Japan, comments from BOJ Governor Kazuo Ueda on more challenging policy ahead caused traders to shift interest-rate bets, with overnight-indexed swaps at one point on Thursday showing an almost 45% chance that the BOJ would end its negative interest rates policy at this month’s meeting.

Traders also pointed to the fact that markets have run up in recent weeks and are due for a pause. There was a sense of caution ahead US labor market data, including jobless claims today and non-farm payrolls on Friday.

“Both valuation and positioning would argue for exhaustion in the recent bond rally,” said Mohit Kumar, chief European economist at Jefferies International. “Given our view of only a mild recession and inflation still remaining sticky, we would argue that the market has run a bit ahead of itself.”

Among individual stocks, Chewy dropped 11% in US premarket trading after the online pet supplies retailer cut its sales guidance. Advanced Micro Devices Inc. rose after unveiling new so-called accelerator chips aimed at taking on the lucrative artificial intelligence market.

In other markets, gold climbed and the dollar weakened. Bitcoin slipped below $44 000.

The Swiss franc rose to the strongest level against the euro since the Swiss National Bank abandoned its currency cap almost nine years ago. The move reflects a shift in interest-rate expectations as confidence grows that the European Central Bank will move to cut rates sooner than its Swiss counterpart.

Key events this week:

• US wholesale inventories, initial jobless claims, Thursday
• Germany CPI, Friday
• Japan household spending, GDP, Friday
• Reserve Bank of Australia’s head of financial stability Andrea Brischetto speaks at Sydney Banking and Financial Stability conference, Friday
• US jobs report, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.2% as of 11:35 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures rose 0.2%
• Futures on the Dow Jones Industrial Average fell 0.2%
• The MSCI Asia Pacific Index fell 0.2%
• The MSCI Emerging Markets Index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro was little changed at $1.0765
• The Japanese yen rose 1.5% to 145.17 per dollar
• The offshore yuan rose 0.2% to 7.1627 per dollar
• The British pound rose 0.1% to $1.2574

Cryptocurrencies

• Bitcoin fell 1.2% to $43 289.2
• Ether fell 0.4% to $2 238.47

Bonds

• The yield on 10-year Treasuries advanced five basis points to 4.15%
• Germany’s 10-year yield declined two basis points to 2.18%
• Britain’s 10-year yield advanced five basis points to 3.99%

Commodities

• Brent crude rose 1% to $75.04 a barrel
• Spot gold rose 0.2% to $2 029.95 an ounce