Equities retreat as bond yields continue advancing

US equities pulled back last week as Treasury yields continued rising against the background of ongoing US-China trade talks with no certain progress. The SP 500 closed down 0.5% while the ICE dollar index rebounded 1.2% for the week.

The SP 500 declined every session last week except Monday and Wednesday. It ended up 0.1% Monday on receding US-China trade war fears after President Trump’s tweet overnight he had asked for a stay of his order banning US companies from selling to China’s ZTE corporation. The broad market index fell 0.7% Tuesday. It rebounded 0.4% Wednesday buoyed by upbeat reports from retailers as industrial production rose at above-expected rate of 0.7% in April. The SP 500 slipped 0.1% Thursday. It slid 0.3% Friday led by financial shares.

The ICE US dollar index rose every session last week. The dollar edged up 0.1% Monday. It rose 0.6% Tuesday as 10-year Treasury note yield breached above the 3% threshold. 3 The ICE dollar index added 0.1% Wednesday and gained 0.2% Thursday as 10-year Treasury note yield remained near 3.1%, a seven year high. The dollar index closed up 0.2% Friday. Minutes from the Federal Reserve and European Central Bank last meetings due Wednesday and Thursday, and UK inflation and GDP reports Wednesday and Friday are the major economic events this week. The UK economic growth forecast is 0.1% for the first three months of 2018, steady compared with fourth quarter of previous year, while consumer price index is expected to remain at 2.5% annual rate for April.