Rising debt clouds market optimism
By Aline van Duyn and Michael Mackenzie in New York and Mure Dickie in Tokyo
Published: May 22 2009 12:36 | Last updated: May 23 2009 00:05
Recent market optimism about improved financial and economic conditions was for the second day on Friday overshadowed by concerns about the implications of soaring government debt in the US and the UK.
The dollar and Treasury yields came under pressure, while US equities succumbed to a late sell-off ahead of a holiday weekend
The yield on the 10-year Treasury note rose 9 basis points to 3.45 per cent, its highest level since November, with investors wary ahead of $101bn in new debt sales by the US Treasury next week.
The dollar fell to below $1.40 per euro for the first time since January 1. The dollar index, which measures the currency against its six major rivals, fell 3.6 per cent this week, its worst performance since mid-March.
The S&P closed 0.2 per cent lower, clipping gains it made at the start of the week to end with a weekly gain of 1.2 per cent.
The concern in the US came as the Bank of Japan on Friday upgraded its outlook for the world’s second-largest economy for the first time in nearly three years, raising hopes that the country could be through the worst of the global recession.
The central bank said exports and production were beginning to bottom out and that the effects of government stimulus spending should soon begin to kick in.
The cautious upgrading of the bank’s economic assessment followed the release this week of output data that showed the Japanese economy contracted by a record 4 per cent quarter-on-quarter in the first three months.
By Aline van Duyn and Michael Mackenzie in New York and Mure Dickie in Tokyo
Published: May 22 2009 12:36 | Last updated: May 23 2009 00:05
Recent market optimism about improved financial and economic conditions was for the second day on Friday overshadowed by concerns about the implications of soaring government debt in the US and the UK.
The dollar and Treasury yields came under pressure, while US equities succumbed to a late sell-off ahead of a holiday weekend
The yield on the 10-year Treasury note rose 9 basis points to 3.45 per cent, its highest level since November, with investors wary ahead of $101bn in new debt sales by the US Treasury next week.
The dollar fell to below $1.40 per euro for the first time since January 1. The dollar index, which measures the currency against its six major rivals, fell 3.6 per cent this week, its worst performance since mid-March.
The S&P closed 0.2 per cent lower, clipping gains it made at the start of the week to end with a weekly gain of 1.2 per cent.
The concern in the US came as the Bank of Japan on Friday upgraded its outlook for the world’s second-largest economy for the first time in nearly three years, raising hopes that the country could be through the worst of the global recession.
The central bank said exports and production were beginning to bottom out and that the effects of government stimulus spending should soon begin to kick in.
The cautious upgrading of the bank’s economic assessment followed the release this week of output data that showed the Japanese economy contracted by a record 4 per cent quarter-on-quarter in the first three months.
