Market update: US 10-year bond yields reach highest level in two years – 16.08.2013

Source: Henderson Global Investors

US equities closed sharply lower yesterday with the Dow Jones and the S&P 500 down 1.5% and 1.4% respectively while the yield on US 10-year government bonds reached 2.8%, its highest level in two years. US jobless claims fell more than expected and the NAHB (National Association of Home Builders) Housing Market Index posted its highest reading since November 2005. Headline US consumer price index was up 2.0% year-on-year, which was in line with market consensus. Shares in IT equipment maker Cisco slumped 7.2% after warning on weaker global demand and announcing it will cut 5% of its workforce. Retail giant Walmart fell 2.6% after the company reported an unexpected fall in US sales and provided a more downbeat sales outlook for the year.

European equities have opened lower this morning with the FTSE 100 down 0.1% and the FTSE Eurofirst 300 is down 0.3%. The FTSE 100 suffered its largest single day drop in nearly two months yesterday after recent strong data releases reignited concerns that central banks would begin tapering monetary stimulus earlier. Gold miners Randgold and Fresnillo are leading the gainers this morning, tracking a bounce in gold prices.