Stocks set for strongest week of 2023 on interest rate cheer By Reuters

By Tom Westbrook

SINGAPORE (Reuters) – Stocks were heading for their biggest weekly rise in a year on Friday, while bonds rallied and the dollar fell as investors welcomed a pause in bond rate hikes. American interests.

U.S. jobs data, due later today, is the next big story.

Benchmark 10-year Treasury yields have fallen more than 20 basis points in two sessions since the U.S. Federal Reserve left rates unchanged on Wednesday and its Chairman, Jerome Powell, said risks to the outlook rate setting were balanced.

Treasuries were not traded in Asia as markets were closed in Tokyo due to a public holiday, and 10-year futures held on to recent gains, implying yields were flat at 4.67%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9%.

were down 0.1%, weighed down by a 3% drop in Apple (NASDAQ:) shares after the market after the tech giant’s sales forecast came in below expectations.

Global stocks are up 4.2% for the week so far, their biggest weekly gain since November 2022.

“Markets are increasingly convinced that US rates have now peaked,” ANZ analysts said in a note.

“As logical as that sounds…Powell warned that for higher bond yields to prevent further rise, they would have to remain high, so that markets could not have their proverbial cake and eat it too.”

The U.S. Treasury Department also said Wednesday it would auction less long-term debt than expected and a weaker-than-expected manufacturing survey helped bolster bets that further hikes are not needed.

The Bank of England also left interest rates unchanged on Thursday and stressed that it does not plan to cut them any time soon.

Ten-year gilts saw their biggest rise in over a month, sending yields down almost 12 basis points to 4.39%. Ten-year German Bund yields also fell on Thursday, but by only 4.6 basis points to 2.71%.

“It looked like a fair number of investors were waiting on the sidelines and willing to gamble on lower yields and yesterday they removed some potential roadblocks to adopting that view,” analysts at Rabobank.

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In foreign exchange markets, the Australian dollar is leading gains among G10 currencies this week after surprise inflation in the third quarter led traders to bet on a rate hike from the Reserve Bank of Australia ( RBA) Tuesday.

Australian retail sales stumbled in the September quarter, with sales per person posting the biggest annual decline on record, data released on Friday showed.

The Australian dollar is up 1.5% at $0.6430 and has surpassed its 50-day moving average. The New Zealand dollar is not far behind with a gain of 1.4% to $0.5892. [AUD/]

“Money markets have more than fully priced in a further RBA hike by Q1, which is eye-catching within the G10. They therefore benefit from a degree of support from RBA expectations that they rarely have had since the pandemic,” Westpac analyst Sean Callow said.

“(But) a rise to $0.65 will likely require either a particularly weak US jobs report or a hawkish hike from the RBA.”

Economists polled by Reuters expect the United States to create 180,000 jobs in October.

The worst performing G10 currencies of the week were the safe-haven Japanese yen and Swiss franc as investors sought riskier assets.

The Bank of Japan will continue to unwind its ultra-accommodative monetary policy next year, six sources familiar with the BoJ’s thinking told Reuters, although the slow progress is little comfort for a yen weighed down by low Japanese interest rates.

It was trading at 150.44 per dollar on Friday. futures are down 4% for the week at $86.80 a barrel. Gold is down 1% at $1,983 an ounce.

surged 15% with the mood and appears to be reviving the momentum that had fizzled with the FTX exchange in 2022. FTX founder Sam Bankman-Fried was convicted of stealing from customers on Thursday. Bitcoin bought $34,600.