Global stocks began the trading week with an upward spurt, shaking off the recent turmoil and sending the US benchmark S&P 500 higher after it suffered its worst week in over two years.
Government bond yields also found some stability, having initially climbed on concerns about inflationary pressures.
Koon Chow, a strategist at UBP, said the simultaneous rebound in equities and fall in bond prices looked like a return to “the old normal” in which markets see a benign economic outlook.
“Reflation can be good news for company earnings,” he said. “And as central banks take us out of the intensive care of bond-buying, there are fewer buyers in sovereign capital markets.”
The 10-year US Treasury yield crossed 2.9 per cent for the first time since 2014, according to Reuters data, before returning back to trade around 2.87 per cent. The moves come ahead of US inflation figures due on Wednesday, which could be critical for the market’s outlook on monetary policy.
Whereas global shares suffered wild swings last week, driven by fears of rising bond yields and the unwinding of trades betting on low market volatility, on Monday they found support. The S&P 500 was trading up 1.8 per cent at 2,666 by mid-afternoon in New York.
Mark Schofield, a senior strategist at Citi, said: “We think it is too early to call an end to the equity bull market.”