By Joyce Yu
Philadelphia, PA–Wall Street saw little movement on Monday amid a blizzard of earnings from the world’s biggest firms and concerns over surging U.S. bond yields to a peak level.
Readings from Japan, France, and Germany were all relatively positive with Japan’s PMI data firming as output and domestic demand picked up. Surveys of business confidence in manufacturing and services came in slightly above expectations in Germany and France.
“It’s a good reading, it’s still encouraging,” said Chris Williamson, chief business economist at IHS Markit shared with CNBC.
In the U.S., sales of existing homes increased 1.1% on a monthly basis in March, indicating that buyers are undeterred by the dwindling number of properties available on the market. Homes sold last month at a seasonally adjusted annual pace of 5.60 million, up from 5.54 million in February, according to report released by the National Association of Realtors said Monday.
On the geopolitical front, North Korea said on Saturday that it would immediately suspend nuclear and missile tests, scraping its nuclear test site and instead pursue peace and economic growth. Talk of a trip by the U.S. Treasury Secretary Steven Mnuchin to China, also fueled hopes that the recent trade tensions between the world’s two biggest economies may be thawing.
At a news conference during the International Monetary Fund and World Bank spring meetings in Washington, Mnuchin said, “A trip is under consideration.” “I did meet with the Chinese here. The discussions were really more around the governor’s actions at the PBOC (People’s Bank of China) and certain actions they’ve announced in terms of opening some of their markets, which we very much encourage and appreciate.”
Mnuchin said he was “cautiously optimistic” the United States could broker a trade deal with Beijing, while China also said on Sunday it would “welcome” direct trade talks with the United States.
Amid reassuring data is the rise of 10-year U.S. Treasury which hits its highest level since January 2014 at 2.99%. With more signs of inflation emerge, the market is finally coming around to the idea that the Federal Reserve this year will be raising interest rates a total of four times. The CME’s FedWatch tool, which has been a reliable gauge for the Federal Open Market Committee’s actions, assigned a 48.2% chance in early trade, up from 33% a month ago. Despite forecasts from some Wall Street firms of a more aggressive approach by the Fed, the general markets thus far have been anticipating three moves this year — the increase already approved in March, plus two more, likely in June and September.
