“Ten-Year Tops 3.05%, Stocks Slide as Dollar Surges: Markets Wrap.”
The 10-year Treasury yield topped 3.05 percent for the first time in four years, stocks slumped from two-month highs and the dollar rallied as speculation grew that signs of a firm American economy won’t derail the Federal Reserve from its rate path.
The S&P 500 Index halted a four-day rally, ending a risk-on mood that had propelled equities to the highest since mid-March. Upbeat retail sales data fueled bets the Federal Reserve may raise rates three more times this year, pushing Bloomberg’s dollar index to the highest level of 2018 and sending the 10-year note yield to its highest since 2011. Banks led gains on U.S. equity benchmarks.
Investors grappled with trade, growth, and geopolitical worries as a risk aversion spread across assets. Rising yields, a stronger dollar and sliding stocks are fast becoming a familiar and uncomfortable cocktail for investors. Now violence in the Middle East, the U.S.-China trade spat, uncertainty on Italy’s government and global growth concerns are helping cement the prevailing sentiment.
European equities were mixed but benchmarks fell in South Korea and Australia earlier, and in Hong Kong after data signaled investment slowing in China. Shanghai shares bucked the declines as the same numbers showed economic momentum broadly holding The euro slid following disappointing German growth data. Despite the sour mood, established safe-haven assets failed to catch a bid. Gold and the yen dropped, and the Swiss franc weakened.
Elsewhere, the Turkish lira hit a new low, plunging after President Recep Tayyip Erdogan said he intends to tighten his grip on the economy and take more responsibility for monetary policy if he wins an election next month. Emerging-market stocks slumped.
“As Venezuelans suffer, Maduro buys foreign oil to subsidize Cuba.”
Venezuela’s state-run oil firm PDVSA has bought nearly $440 million worth of foreign crude and shipped it directly to Cuba on friendly credit terms – and often at a loss, according to internal company documents reviewed by Reuters.
The shipments are the first documented instances of the OPEC nation buying crude to supplY regional allies instead of selling them oil from its own vast reserves.
Venezuela made the discounted deliveries, which have not been previously reported, despite its dire need for foreign currency to bolster its collapsing economy and to import food and medicine amid widespread shortages.
The open-market oil purchases to subsidize one of Venezuela’s few remaining allies underscores its increasing global isolation and the disintegration of its energy sector under socialist President Nicolas Maduro.
The purchases came as Venezuela’s crude production hit a 33-year low in the first quarter – down 28 percent in 12 months. Its refineries are operating at a third of capacity, and its workers are resigning by the thousands.
“Oil May Return to $100, But It Would Feel Different.”
Oil may return to $100 a barrel, but it would have much less of an impact on the global economy than when prices hit that level in 2011, according to Bloomberg Economics’ simulations. The amount of oil needed to produce a unit of output has been on a steady downward trend for decades and improvements in energy efficiency and a shift in the industrial structure in many advanced economies help explain this downshift. If the general level of prices and energy usage had been the same in 2011 as they are now, $100 oil then would have felt more like $79, BE research shows.
“Tension in Gaza as Palestinians begin to bury 58 dead.”
Funerals are being held in Gaza after the deadliest day of violence there since a war in 2014. On Monday, 58 people were killed when Israeli troops opened fire during Palestinian protests.
Tuesday is the 70th anniversary of what Palestinians call the Nakba – a mass displacement after Israel’s creation. Israel’s military said it was preparing for further confrontations on Tuesday ,but Palestinian groups indicated they intended to rein in the protests.
Monday’s violence came as the US inaugurated its first embassy in Jerusalem, a controversial move that broke with decades of US policy and incensed Palestinians. Palestinians claim East Jerusalem as the capital of a future Palestinian state. Many see the US move as backing Israeli control over the whole of the city, which Israel regards as its indivisible capital.
Palestinian officials said that as well as those killed, about 2,700 people had been injured in what they called a massacre. Israeli Prime Minister Benjamin Netanyahu said his military was acting in self-defence against Gaza’s Islamist rulers, Hamas, who seek to destroy Israel. Israel’s military said it had only fired at «targets of terrorist activity».