* Inflationary pressures fuel rate hike expectations. * Trump-Xi summit gives markets little to cheer. * Yen struggles at 158 level; turmoil weighs on sterling. By Samuel Indyk and Rae Wee. The dollar was a touch higher and heading for its biggest weekly gain in more than two months, as mounting inflationary pressures from higher energy prices fuelled bets on a Federal Reserve rate hike this year.
Incoming Federal Reserve chief Kevin Warsh's plans to shrink the U.S. central bank's "footprint" in financial markets could be constrained by the rising federal debt and potentially lost luster of U.S. Treasuries, analysts said.
Federal Reserve Chair Jerome Powell's immediate predecessors knew how to "go big" in a crisis, steer a committee towards an interest rate decision, and oversee changes in central bank strategy, all parts of the job that the lawyer and former private equity investor also had to learn.
Futures tracking the Nasdaq and the S&P 500 tumbled on Friday, with an AI-driven rally in U.S. stocks poised to stall, as Treasury yields jumped on concerns about higher inflation driven by the Middle East conflict. The yield on 10-year Treasury notes, a benchmark for global borrowing costs, hit 4.54% - its highest level since May 2025.
* Futures down: Dow 0.7%, S&P 500 1.1%, Nasdaq 1.6% Futures tracking the Nasdaq and the S&P 500 tumbled more than 1% on Friday, with an AI-driven rally in U.S. stocks poised to stall, as Treasury yields jumped on concerns about higher inflation driven by the Middle East conflict.
* MSCI EM FX, stocks eye sharpest weekly falls since early March. * Rising US Treasury yields pressure stocks, KOSPI falls 6% * Romania interest rate decision awaited. By Purvi Agarwal. Emerging market equities fell on Friday, led by declines in heavyweight Asian stocks, while currencies weakened against the dollar, setting them on track for losses in a week marked by the U.S.-China summit.
* Bond market selloff gathers pace. * US Treasury yields at one-year highs. * Euro zone bond yields rise, JGB yields hit record peaks. By Amanda Cooper. The global bond market limped to the end of a bruising week on Friday, as growing evidence of economic damage from the Iran war prompts investors to assume interest rates will rise faster than expected and growth will suffer.
Japanese government bond yields climbed across the curve on Friday, with several tenors reaching record highs on rising bets for Bank of Japan interest rate hikes amid building inflationary pressures. The benchmark 10-year JGB yield rose as much as 10 basis points to 2.73%, the highest level since May 1997.
The carry trade, where investors buy high-yielding major currencies and sell low-yielding ones, is having its best run in years, even with major risk-driven moves in global markets. This reflects a combination of low currency volatility, large gaps between interest rates in developed economies and the yen not getting a safe-haven lift from the Iran war.
The Bank of Japan will raise its key interest rate to 1.0% in June, nearly two-thirds of economists said in a Reuters poll, as it presses ahead with efforts to normalise monetary policy amid rising inflation concerns from the war in Iran.
Alphabet has sold 576.5 billion yen in yen-denominated bonds, a term sheet showed on Friday, the largest-ever issue by a foreign company. It is the first yen-denominated debt issue for Alphabet, which like other tech giants is in the midst of a huge investment programme in artificial intelligence and has sought to diversify?sources of funding.
Alphabet has sold 576.5 billion yen in yen-denominated bonds, a term sheet showed on Friday, the largest-ever issue by a foreign company. It is the first yen-denominated debt issue for Alphabet, which like other tech giants is in the midst of a huge investment programme in artificial intelligence and has sought to diversify sources of funding.
Japan may face another round of broad-based price increases around summer, as firms ranging from food makers to hot spring facilities consider passing on soaring energy costs from the Middle East conflict, the central bank said on Friday.
Japan's economy is expected to have grown for a second quarter in January-March, supported by recovering exports and solid domestic demand, although the full impact of the Iran war had yet to be felt, a Reuters poll showed on Friday.
The dollar was a touch higher and heading for its biggest weekly gain in more than two months, as mounting inflationary pressures from higher energy prices fuelled bets on a Federal Reserve rate hike this year. The dollar's climb on Friday came alongside rising U.S. Treasury yields?that have jumped to one-year peaks as traders ramped up bets that the Fed would need to raise rates this year.
* Dollar up more than 1% this week, sharpest increase since early March. * Trump-Xi summit enters second day as investors await more details. * Yen struggles at 158 level; sterling weighed down by UK political turmoil. By Rae Wee.
* Fed's Barr says misguided to ease bank liquidity rules to lower Fed holdings. * Barr says efforts to cut Fed balance sheet via rule changes could increase risk. * Barr says current Fed policy system has worked well. By Michael S. Derby.
Federal Reserve Governor Michael Barr said Thursday that lowering banks' liquidity rules to reduce the size of the central bank's balance sheet is a bad idea and could undermine the safety of the financial system.
* April annual wholesale inflation hits 3-year high of 4.9% * Yen-based import price index spikes 17.5% yr/yr in April. * Rises driven by petroleum, chemical, metals goods prices. * Markets price in strong chance of BOJ rate hike in June. * Inflation, fiscal concerns lift 10-year yield to 29-year high. By Leika Kihara.
The U.S. long bond has been in the spotlight recently, with the 30-year Treasury yield piercing 5% and nearing its highest level in two decades. The rise in long-dated yields - Wednesday's 30-year auction sold above 5% for the first time since 2007 - has grabbed headlines, but yields at the front end have actually spiked by even more.
Peru's central bank held its benchmark interest rate for the eighth straight time on Thursday, keeping it at 4.25% in line with analysts' expectations after inflation in April remained outside the bank's target range.
Federal Reserve Governor Michael Barr said Thursday that lowering liquidity rules to get the central bank's balance sheet smaller is a bad idea and could undermine the safety of the financial system.
* Fed's Barr says misguided to ease bank liquidity rules to lower Fed holdings. * Barr says efforts to cut Fed balance sheet via rule changes could increase risk. * Barr says current Fed policy system has worked well. By Michael S. Derby.
Federal Reserve Bank of New York President John Williams said on Thursday he does not see a need right now for the central bank to weigh any change in interest rate policy amid the uncertainty created by the Middle East war. Monetary policy is in a "good place" right now, the official said in remarks given in New York.
Coupang Inc (CPNG): * Coupang Inc (CPNG): U.S. SENATE CONFIRMED KEVIN WARSH AS FEDERAL RESERVE CHAIR AND HE RESIGNED AS A DIRECTOR OF CO EFFECTIVE IMMEDIATELY - SEC FILING. * Coupang Inc (CPNG) - BOARD TO REDUCE SIZE BY ONE DIRECTOR AFTER WARSH RESIGNATION - SEC FILING Source text: Further company coverage:
U.S. Federal Reserve Governor Stephen Miran on Thursday said he would resign his seat on or shortly before Kevin Warsh is sworn in as the Fed's next chair, a necessary step since there is no other open seat on the seven-member board for Warsh to fill and Miran's term had technically expired in January.
Appalachian Power Recovery Funding LLC: * APPALACHIAN POWER RECOVERY FUNDING FILES PRELIMINARY TERM SHEET FOR $1.38 BILLION SERIES 2026-A SENIOR SECURED SAC BONDS - SEC FILING Source text: Further company coverage:
Telecom Italia SpA: * FITCH UPGRADES TELECOM ITALIA TO 'BB+'; STABLE OUTLOOK. * FITCH: UPGRADE REFLECTS STRONGER CASH FLOW GENERATION, STABILISING LEVERAGE AFTER DISPOSAL OF TIM'S FIXED LOCAL ACCESS NETWORK & OTHER NON-CORE ASSETS. * FITCH ON TELECOM ITALIA: STABLE OUTLOOK REFLECTS EXPECTATIONS THAT CASH FLOW & LEVERAGE WILL REMAIN WITHIN OUR 'BB+' RATING SENSITIVITIES.
U.S. retail sales increased solidly for a third straight month in April, though part of the rise in receipts was due to a sharp rise in inflation since the start of the U.S.-backed war with Iran. Rising price pressures were underscored by other data on Thursday showing imported inflation last month rose at its fastest pace in four years.
Federal Reserve Bank of Cleveland President Beth Hammack reiterated on Thursday that a wide range of evidence supports the idea that an independent central bank makes policy more effectively.
* IMF welcomes engagement between world's two largest economies. * IMF says Middle East war pushing global economy into lower growth scenario. * Fund continues to discuss potential assistance to countries struggling with high energy prices. By David Lawder and Andrea Shalal.
* Investors monitor US-Iran tensions, Trump's China visit. * ECB rate hikes expected as oil prices fuel inflation fears. * Fed rate cut bets recede. By Samuel Indyk. Germany's 10-year government bond yield fell on Thursday but remained close to its recent multi-year peak as elevated energy prices solidified expectations for higher inflation and European Central Bank rate hikes.
* Retail sales increase 0.5% in April, in line with expectations. * Core retail sales up 0.5%, marking fourth straight monthly gain. * Weekly jobless claims climb 12,000 to 211,000. * Import prices jump 1.9% in April; up 4.2% on a year-over-year basis. By Lucia Mutikani.
Angola's central bank cut its benchmark lending rate by 50 basis points to 17% in a decision announced on Thursday. Inflation in the Southern African oil-producing country eased to 11.58% year-on-year in April, down from 12.42% in March. The central bank wants to bring inflation down to single digits.
Inflation is the biggest risk to a U.S. economy that has shown "remarkable resilience" in the face of numerous challenges, and the job market is stable, Kansas City Federal Reserve President Jeffrey Schmid said on Thursday. "I see continued inflation as the most pressing risk to the economy," Schmid said in prepared remarks to a banking industry conference hosted by the Kansas City Fed.
* Treasury yields retreat as oil prices drop and technical support attracts buyers. * Inflation concerns persist after strong U.S. producer price data and Middle East conflict. * Retail sales rise, jobless claims steady, Xi warns Trump on Taiwan tensions. By Karen Brettell.
Top brokerages expect the benchmark S&P 500 index to extend its rally in 2026, even as Middle East tensions disrupt global energy flows and drive inflation higher. Strategists at major investment banks expect momentum in artificial intelligence and strong corporate earnings to offset the conflict's short-term economic impact. Morgan Stanley became the latest brokerage to raise its index target.
The number of Americans filing claims for unemployment benefits increased moderately last week, pointing to a stable labor market even as rising energy prices from the war with Iran drive up inflation. Initial claims for state unemployment benefits rose 12,000 to a seasonally adjusted 211,000 for the week ended May 9, the Labor Department said on Thursday.
The number of Americans filing claims for unemployment benefits increased moderately last week, pointing to a stable labor market even as rising energy prices from the war with Iran drive up inflation. The government reported on Wednesday that producer prices recorded their biggest increase in four years in April.
* White House weighs gas tax suspension as fuel prices surge, options dwindle. * Polls show most Americans feel financial strain, many doubt war is worth the cost. * Some Republicans back gas tax suspension, but party leaders are so far noncommittal. By Jarrett Renshaw, Nandita Bose and Jacob Bogage.
U.S. retail sales increased solidly for a third straight month in April, though part of the rise in receipts was due to a sharp rise in inflation since the start of the U.S.-backed war with Iran. Rising price pressures were underscored by other data on Thursday showing imported inflation last month rose at its fastest pace in four years.
U.S. retail sales increased further in April, but some of the rise in receipts was likely due to higher inflation as the war with Iran boosted prices of energy products and other commodities. The U.S.-Israeli conflict with Iran is driving up inflation. Gasoline prices rose 12.3% in April, data from the U.S. Energy Information Administration showed.
U.S. Treasury Secretary Scott Bessent said on Thursday that the U.S. may see one or two "hot" inflation data readings before disinflation resumes, and new Federal Reserve Chair Kevin Warsh will keep an open mind about inflation as energy prices subside.
* White House weighs gas tax suspension as fuel prices surge, options dwindle. * Polls show most Americans feel financial strain, many doubt war is worth the cost. * Some Republicans back gas tax suspension, but party leaders are so far noncommittal. By Jarrett Renshaw, Nandita Bose and Jacob Bogage.
* Markets monitor Trump-Xi meeting, Iran war in focus. * U.S. Producer Price Index posts largest gain in four years. * HSBC raises 2026 silver price forecast to $75/oz. By Noel John.
* April new yuan loans shrink for first time in nine months. * Outstanding loan growth hits record low. * Q1 GDP growth picks up, but Iran war clouds outlook. * PBOC seen with limited room to ease as inflation pressures build. By Shi Bu and Kevin Yao.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
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