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Bond Yields on the Decline as Oil is Keeping the Upward Momentum

Miguel A. Rodriguez
Miguel A. Rodriguez
20 December 2023

U.S. and European stocks rose and yields fell after Richmond Fed President Barkin's latest remarks led traders to believe the Fed is already on track to achieve a soft landing and cut interest rates. Continue reading to get the latest market news. 

Indices On a 7-Week Streak While Bonds Dip

North American indices have now added seven consecutive weeks of increases with the S&P500 reaching an all-time high yesterday.

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USA500 weekly chart, December 20, 2023. Source: CAPEX.com WebTrader.     

US Treasury Bond Yields remain in the low trading zone recently with the 10-year bond at 3.90%.

European Bond Yields are also trading lower with the German Bond at 2.01%, the lowest level since January of this year. This decrease is notable, especially considering that at the last meeting of the European Central Bank, President Lagarde expressed caution about easing monetary policy. Her stance is primarily due to the persistent high inflation levels in Europe.

The European CPI data published yesterday shows a significant drop with the year-on-year CPI at 2.4%, already very close to the 2% target. In addition to this, the weak economic situation of most Eurozone countries indicates that the ECB will be forced to follow the Fed's lead and cut interest rates at the beginning of next year.

Euro on the Uptick as it Approached the Resistance Zone

Still, the Euro gained ground yesterday against the US Dollar and traded at levels close to 1.10, which is technically the next resistance zone. The consensus among the main investment banks is that the dollar has started a downward trend that could continue throughout next year.

WTI Oil Still Experiencing Gains After US Strategic Decisions

Oil prices rose on Tuesday, adding to the previous session's gains after the United States announced joint military plans with allied countries to protect shipping through the Red Sea.

WTI Oil rose almost 2% yesterday on concerns that shipping companies will have to divert their ships via another route other than the Red Sea, causing supply disruptions due to increased attacks by Houthi militants in Yemen.

 

Key Takeaways

  • Bonds continue to drop as the US 10-Year Bond is at 3.90%.
  • EU CPI data showed a drop with year-on-year CPI at 2.4%.
  • The Euro gained against the US Dollar near 1.10.
  • Oil rose nearly 2% yesterday based on global shipping concerns.

 

Related Articles:

Sources: Bloomberg, Reuters 

 

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Miguel A. Rodriguez
Miguel A. Rodriguez
financial_writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.