The 10-year-2-year yield spread has more than reversed all of its gains since the U.S. election, while regional banks have held up better. This divergence is unlikely to hold for long: in our view, either the yield curve will start steepening again, or regional banking stocks will drop sharply to "catch down" with the recent drop in interest rates.
The Fed's expected plans for rate increases may be too fast for an economy that has shown recent signs of weakness, St. Louis Federal Reserve President James Bullard said on Friday, sketching out the case for a continued go-slow approach.
U.S. mortgage rates fell in step with bond yields in the wake of weaker-than-expected domestic economic data and as investors scaled back expectations about the number of interest rate increases by the Federal Reserve in 2017.
The dollar recovered from a two-week low against a broad index on Thursday, having slid after U.S. President Donald Trump said the currency was getting too strong and that he would prefer the Federal Reserve to keep interest rates low.
U.S. Treasury yields tumbled on Thursday and were on track for the biggest weekly decline since late 2015 after U.S. President Donald Trump said he would like to see interest rates stay low, while inflows into bonds drained life from stocks.
The EC yesterday formally blocked the proposed merger between London Stock Exchange Group and Deutsche Boerse AG-Tender. This was expected. The EC is expected to publish a more detailed decision at a later date. London Stock Exchange Group also announced a £200 million buyback program.