Market update: The spike in US Treasury yields on Fed tapering concerns shape the markets – 19.08.2013

Source: Henderson Global Investors

US markets finished lower on Friday. The mood was dampened by the continuing rise in US Treasury yields as their prices fall on tapering concerns. An unexpected plunge in consumer sentiment for August increased worries for the health of the consumer. A less-than-expected rise in housing starts and permits further sapped appetite. Benchmark US Treasury yields rose to their highest level since 2011, while on the stock markets the Dow Jones lost 0.2% and the S&P 500 recorded its seventh loss in ten days, down 0.3%. Defensive stocks led the way lower.

Overnight trading in Asian markets has produced mixed results. The Nikkei 225 is up 0.8% helped by a weaker yen, and news that Japanese exports rose 12.2% year-on-year (yoy) in July while imports jumped 19.6% yoy. Chinese stocks had a calmer session after the tech-driven spike on Friday; the Shangahi Composite gained 0.8%. European bourses are in a cautious mood this morning as the markets await the minutes of the last Fed meeting on Wednesday, to search for clues on the timing of tapering. At the time of writing the FTSE Eurofirst 300 is down 0.4% while the FTSE 100 is not far behind, down 0.3%.