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Treasury intervention lifts risk appetite

The US Treasury’s plans to support the market for longer-dated debt helped push yields lower on Wednesday, offering relief to equities after mounting concern over government borrowing had unsettled investors. US stocks ended narrowly mixed, European markets closed largely lower and Asian equities climbed on Thursday, led by a sharp recovery in South Korean semiconductor shares. The US dollar remained near a three-month low, while bitcoin and Ethereum rallied strongly after the Securities and Exchange Commission set out a proposed regulatory framework for crypto assets.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

US dollar bills
© shutterstock

The US dollar traded near a three-month low on Thursday after the Treasury announced plans to double buybacks of long-dated government bonds, easing pressure after a global sell-off had lifted the 30-year Treasury yield to 5.337% earlier this week. The 30-year yield subsequently fell nine basis points to below 5.2%, while the US Dollar Index stood at 98.89 and the euro traded at USD 1.1672, its highest level since late May. Gold, which surged after the announcement on Wednesday, was trading around USD 4480 per ounce on Thursday. Concerns about rising government debt and higher oil prices amid the US-Israeli war with Iran had previously supported long-term yields and weighed on risk sentiment.

Bitcoin, Ethereum rise on SEC proposal

Bitcoin and Ethereum surged on Wednesday after the Securities and Exchange Commission proposed rules intended to clarify how crypto companies can raise capital and meet disclosure requirements. Bitcoin traded +8.2% at USD 69,540, while Ethereum shot up more than 18% to USD 2255. The proposal would allow certain mature crypto networks to leave securities classification once they have met key managerial commitments.

US stocks little changed as yields fall

US equities were little changed on Wednesday after the Treasury said it would increase buybacks of long-dated bonds, helping to lower yields that had risen on inflation concerns, the Iran war, expanding public debt and major AI companies’ financing needs. The Dow Jones Industrial Average gained 0.2% to 53,463.05 points and the S&P 500 rose 0.2% to 7707.98 points, while the Nasdaq 100 slipped 0.2% to 29,426.02 points. Moderna surged 177% after positive melanoma-vaccine trial results with Merck, whose shares rose 12.6%, while chipmaker Marvell gained about 10% on an expanded partnership with Google parent Alphabet.

Asian equities recover as bond yields fall

Asian shares were mostly higher on Thursday after the US Treasury's announcement, easing pressure on yields after a recent global sovereign-debt sell-off. South Korea’s Kospi surged 5.8% after falling more than 5% on Wednesday, supported by SK Hynix, which rose more than 12% after accelerating a KRW 40 trillion share-repurchase programme and pledging to return more than half of cumulative free cash flow generated from 2025 to 2027. Japan’s Nikkei 225 rose 1.3%, after data released Thursday showed Japan’s exports grew 23.2% year on year in July, their fastest pace in almost four years, supported by a 49.1% increase in semiconductor-equipment shipments. Hong Kong’s Hang Seng Index gained 1.2%, Australia’s S&P/ASX 200 rose 0.3% and India’s Nifty 50 added 0.6%, while mainland China’s CSI 300 slipped 0.1%.

Euro-area inflation rises to 2.9%

Eurozone annual inflation climbed to 2.9% in July from 2.8% in June, according to Eurostat data released on Wednesday. The rate was 2% a year earlier, while consumer prices increased by 0.2% month-on-month. Energy inflation accelerated to 10.3% from 8.5%, while services inflation edged up to 3.3% from 3.2%; food, alcohol and tobacco inflation eased to 1.2% from 1.5%. European equities were mixed Wednesday, with the Euro Stoxx 50 down 0.4%, Germany’s DAX and France’s CAC 40 both 0.1% lower, while the Swiss Market Index gained 0.5%.
 

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Alibaba, Deere, and Walmart.

Economic data in focus: Swiss trade balance (08:00), German Producer Price Index (08:00), Bundesbank monthly report (12:00), European Central Bank monetary policy meeting minutes (13:30), Philly Fed Manufacturing Index (14:30) and US weekly initial jobless claims (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.