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New York markets pre-Open: Eurozone bonds sell off on rate-hike comment

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New York markets pre-Open: Eurozone bonds sell off on rate-hike comment

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? Eurozone bonds sell off on rate-hike comment.

? Trump instructs Commerce Department to revisit ban on China's ZTE.

? Italian bonds, stocks fall as Five Star moves closer to government.

? S&P 500 set to open higher.

German and French bond yields rose and the euro appreciated against the U.S. dollar as a senior European Central Bank policymaker said guidance about a rate hike could come before the end of the year. Italian stocks fell as populists moved closer to forming a government. Futures pointed to the S&P 500 opening 0.17% higher after President Donald Trump asked the U.S. Commerce Department to revisit sanctions on ZTE Corp., and Asian markets rose.

The Shanghai SE Composite gained 0.34% and Hong Kong's Hang Seng Index closed 1.35% higher as Trump said he is working with the Chinese president to help ZTE "get back into business, fast," ahead of another round of trade negotiations between the two countries in Washington. Shares in FUJIFILM Holdings Corp. jumped 1.56% after Xerox Corp. said it was pulling out of its proposed $6.1 billion sale to the Japanese company.

Brent crude was little changed at $77.13 per barrel at 6:51 a.m. ET on the ICE Futures Exchange, as the policy reversal on ZTE highlighted "questionable consistency in the [U.S.] sanctions policy towards Iran," according to Paul Donovan of UBS Research.

The Euro Stoxx 50 slid 0.25% and FTSE 100 retreated 0.27%, while Germany's DAX index fell 0.41%. ABN Amro Group NV's shares tumbled more than 5% after the bank's profit dipped 8% in the first quarter as impairment charges rose year over year. European companies may face U.S. sanctions if they continue business in Iran, U.S. National Security Adviser John Bolton said May 13.

The euro gained 0.38% after Bank of France Governor François Villeroy de Galhau told Bloomberg Television additional guidance on an ECB rate hike could come after the end of its quantitative easing program before the end of the year. A hike would only be enacted some quarters after the end of quantitative easing and would be contingent on inflation, he said.

The yield on 10-year German Bunds rose 4 basis points to 0.598% and France's 10-year bond yield added the same amount to 0.821%. The yield on Italian government bonds jumped 5 basis points to 1.925% as the anti-establishment Five Star Movement and far-right League party looked close to forming a government. The euro jumped 0.36% to $1.1985. The FTSE MIB shed 0.62% in Milan.

Yields on 10-year Treasurys rose by 1 basis point to 2.9805%.

"The inability of U.S. yields to push higher, the continued absence of signs of an inflation pick-up and the tension seen in emerging market and equity markets, all support the view that recent dollar strength is nothing more than a sharp short squeeze," Société Générale said in a note to investors.

While sterling was up 0.4% against the greenback, the dollar strengthened 0.09% against the yen.

Gold fell 0.1% to $1,319.50 an ounce.

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The day ahead:

9:40 a.m. ET — U.S. Federal Reserve's James Bullard speaks

10 p.m. ET — China industrial production (Econoday consensus: 6.5% yearly)

10 p.m. ET — China retail sales (Econoday consensus: 10.1% yearly)