Global Bond Yields Rise as Central Banks Move Away from Financial Crisis Stimulus

U.S. Treasury yields surged on Friday, led by the 10-year Treasury Note which moved to its highest level since 2014 on Friday morning. The jump in yields corresponded with an underlining move in global bond markets caused by central banks moving away from financial crisis stimulus.

The yield on the 10-year reached 2.656 percent while the yield on the benchmark 30-year Treasury Bond rose to 2.928 percent.

Comex Gold

Gold

Gold prices rose $4.00 or 0.30% as the U.S. Dollar hovered around a three-year low amid heightened fears of a U.S. government shutdown. Nonetheless, the move was not strong enough to prevent a weekly loss for the first time in six weeks.

Despite the underlying strength in reaction to the weaker dollar, gains were limited by the surge in U.S. Treasury Bond yields. U.S. rates rose throughout the week on expectations that the strong global economic recovery will encourage the U.S. Federal Reserve to press ahead with monetary tightening.

WTI Crude Oil

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures declined nearly 1 percent on Friday, posting their first weekly loss in five weeks, amid concerns over increased U.S. production.

The selling pressure started early in response to the International Energy Agency (IEA) monthly report. The report contained both bullish and bearish information, but the bearish news outweighed the bullish news.

The IEA said that global oil stocks have tightened substantially, aided by OPEC cuts, demand growth and Venezuelan production hitting near 30-year lows. However, it also warned that rapidly increasing production in the United States could threaten market balancing.

Brent Crude Oil

“Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico,” the IEA said of 2018 production.

Earlier in the week, the U.S. Energy Information Administration reported that U.S. crude oil production stood at 9.75 million barrels per day (bpd) on January 12. The IEA said it expects this to soon top 10 million bpd, overtaking OPEC giant Saudi Arabia and its partner in the plan to trim the excess global supply, Russia.

In other news, the U.S. oil rig count fell by five rigs in the week through January 19, according to Baker Hughes.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.