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Treasuries slip, dollar steady as markets weigh Trump attack fallout
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Treasuries slip, dollar steady as markets weigh Trump attack fallout
Jul 15, 2024 2:28 AM

LONDON/SYDNEY (Reuters) -The dollar held steady on Monday, while long-dated U.S. bond yields rose, as investors weighed whether an assassination attempt on presidential candidate Donald Trump increased his chances of victory.

European stocks opened lower, after weak economic data from China helped set a cautious tone, while dour updates from British luxury group Burberry and watchmaker Swatch Group raised questions about consumer confidence.

Investors have tended to react to the prospect of a Trump win by pushing Treasury yields higher, in part on the assumption his economic policies would add to inflation and debt.

Online betting site PredictIT has a Republican win at 67 cents, up from 60 cents on Friday. Benchmark 10-year Treasury yields fell in price, which pushed the yield up 2 basis points to 4.208% on Monday.

Eren Osman, managing director of wealth management at Arbuthnot Latham, said a likelier Trump victory would be seen as a positive for risk assets, noting a strong rally for bitcoin since the weekend, but added a word of caution.

"It would be reasonable to suggest it invigorates the Trump supporters to go vote, but they were probably the population of voters that were most likely to go and vote anyway," Osman said.

U.S. retail sales data due on Tuesday was likely to be closely watched for clues on how consumers are faring, after recent data showed slowing growth, he said.

The dollar index was modestly in positive territory at 104.9, supported by gains in the U.S. currency against the yen, rising 0.17% to 157.855, following a bout of suspected intervention last week.

The euro eased slightly to $1.0907, while bitcoin - seen benefiting from lighter regulation under a Trump administration - was up about 5% at a two-week high.

European stocks slipped 0.2%, while S&P 500 futures and Nasdaq futures were both up about half a percentage point. Japan's Nikkei market was shut for a holiday.

CHINA DATA MISSES

Disappointing economic data kicked off a busy week in China, where a once-in-five-year gathering of top officials runs from July 15-18.

Second-quarter growth in the world's second-largest economy was 4.7% higher than a year earlier, missing a 5.1% analyst forecast.

Of particular concern was the consumer sector, with retail sales growth grinding to an 18-month low, while new home prices dropped at their fastest pace in nine years.

"Markets are hoping that more significant measures could be announced during this week's plenary session to help the limping economy and ailing property sector," said Vasu Menon, managing director of investment strategy at OCBC in Singapore.

The onshore yuan was under pressure at 7.2742 per dollar. Mainland stocks were broadly flat and Hong Kong's Hang Seng index fell 1.5%. [.SS]

Later this week, the United States will release data on retail sales, industrial production, housing starts and weekly jobless claims.

Federal Reserve Chair Jerome Powell will appear at the Economic Club of Washington later on Monday and is bound to be asked for his reaction to last week's subdued inflation reading.

Markets are pricing in a 96% chance the Fed will cut rates in September, up from 72% a week earlier.

The European Central Bank meets on Thursday and is considered near-certain to hold rates at 3.75%, ahead of another cut seen likely in September.

Among the host of companies reporting earnings this week are Goldman Sachs, BlackRock, Bank of America, Morgan Stanley, Netflix and Taiwan Semiconductor Manufacturing.

In commodity markets, gold held at $2,408 an ounce, just off last week's top of $2,424. [GOL/]

Oil prices inched up, having fallen on Friday amid signs of progress on a ceasefire between Israel and Hamas. [O/R]

Brent was broadly flat at $85.04 a barrel, while U.S. crude edged up 0.1% to $82.27 per barrel.

(Reporting by Iain Withers in London and Wayne Cole in Sydney; Additional reporting by Tom Westbrook in Singapore; Editing by Lisa Shumaker, Christian Schmollinger, Jamie Freed and Arun Koyyur)

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