Stocks Move Lower Following FOMC Comments on Their Balance Sheet

European yields are moving higher as Bund and Gilt futures lost early gains, while stock markets remain stuck in negative territory. The Euro[i] and GBP are consolidating ahead of Friday U.S. payroll report. Bund futures are outperforming after Draghi and Praet once again tried to draw a line under rate hike and tapering speculations, but while peripheral yields are off earlier highs, spreads continued to widen as supply from France and Spanish added to pressure. And in contrast to the Executive Board members, Bundesbank President Weidmann defended the right to discuss the timing of policy normalization. Still to come the ECB minutes may give a clearer picture of the increasingly divergent views at the council. Stock markets were spooked by yesterday’s FOMC minutes, which showed that the Fed discussed scaling back its balance sheet later in the year, and investors are also eyeing the Trump-Xi meeting.

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