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New York markets pre-open: Yields climb as ECB cues stimulus end; stocks rally

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? Yields rise as investors focus on Fed, ECB meetings next week.

? Dollar falls, euro rises as trade, political concerns take a backseat.

? European bourses track rally in Asian markets, Wall Street.

? S&P 500 set to open higher.

U.S. Treasury yields edged up toward 3% and the dollar fell ahead of the U.S. Federal Reserve's rate decision next week. Eurozone bonds fell as the European Central Bank prepared to discuss winding down its quantitative easing program. Most European bourses advanced following gains in Asian stocks and Wall Street, and futures pointed to the S&P 500 opening slightly higher.

Ten-year yields on German Bunds rose 4 basis points to 0.504% as of 7:02 a.m. ET as investors continued the sell-off triggered after hawkish comments from ECB Chief Economist Peter Praet and other central bank officials signaled the imminent beginning of the end of its €2.55 trillion bond-buying program.

While the remarks could portend to a decision on QE in June, the ECB will likely wait until July to give full clarity on the matter, said Martin van Vliet, senior rates strategist at ING, in a note. "The ECB might not easily give away flexibility and room for maneuver on QE in a situation where downside risks to the economic outlook have increased and political risks could easily re-emerge."

Pressure on Spanish and Italian bonds eased with 10-year yields falling 5 basis points each to 1.453% and 2.893%, respectively. European markets seemed to have settled down after recent sharp volatility generated by concerns over Italy's new populist government, said Michael Hewson, chief market analyst at CMC Markets UK. "Both Spain and Italian markets showing signs of stabilizing, though Italy remains a bigger concern." The FTSE MIB was up 0.09% in Milan.

The euro strengthened 0.44% against the dollar even as the eurozone's economic growth slowed to an annual 2.5% in the first quarter and Germany's new factory orders disappointed in April. The common currency "continues to enjoy a bid as sentiment shifts a bit more constructively ahead of next week's ECB meeting ... A grind higher remains likely," said analysts at TD Securities.

Still, the decline in German industrial orders sends a warning. "Evidence is piling up that the soft patch at the start of the year has been more serious than previously thought," said Carsten Brzeski, chief economist at ING Germany, while maintaining a cautiously positive outlook.

Sterling appreciated 0.3% against the dollar, which slipped 0.19% against the yen. Ten-year U.S. Treasury yields climbed 2 basis points to 2.992% as of 7:07 a.m. ET as investors set aside concerns about trade and focused instead on the outlook for interest rates, not only in the U.S., but also in Europe, Hewson said.

The EU is set to impose retaliatory tariffs on U.S. goods worth about $2.8 billion in response to U.S. tariffs on steel and aluminum imports but market reaction was muted as the measures were delayed to July and will still require a review by national parliaments, Hewson noted. U.S. President Donald Trump is set to attend the G7 meeting June 8-9, but the chances of Washington backing down on trade are low, he added.

Most European stock markets edged higher. The Euro Stoxx 50 gained 0.35% and the FTSE 100 slipped 0.08%.

Key Asian markets broadly closed higher, following gains in Wall Street. The Nikkei 225 and Hong Kong's Hang Seng finished up 0.87% and 0.81%, respectively, while the Shanghai Composite ended 0.18% lower. U.S. stocks rose as higher yields buoyed financials and technology stocks continued to rally, bringing the Nasdaq to a new record close.

Brent crude oil jumped 1% to $76.11 per barrel on the ICE Futures Exchange, recovering from an earlier slide as U.S. crude inventories rose unexpectedly by 2.1 million barrels. Gold inched up 0.08% to $1,302.40 per ounce.

More from S&P Global Market Intelligence:

US pork, produce set to see heavy impact from Canada, Mexico tariffs

Top Trump economic adviser suggests US might not honor WTO decisions on tariffs

Fitch: Global GDP growth likely to withstand most retaliatory tariffs

Bank Indonesia governor hints at further monetary tightening

Poland keeps interest rates unchanged

US trade deficit shrinks in April

Amazon to create 2,500 UK jobs in 2018

The day ahead:

8:30 a.m. ET — U.S. jobless claims (Econoday consensus: 225,000)

9:45 a.m. ET — U.S. Bloomberg consumer comfort index

10 a.m. ET — U.S. quarterly services survey

10:30 a.m. ET — U.S. Energy Information Administration natural gas report

3:00 p.m. ET — U.S. consumer credit (Econoday consensus: $14 billion monthly)

4:30 p.m. ET — U.S. Fed balance sheet

4:30 p.m. ET — U.S. money supply

7:50 p.m. ET — Japan GDP (Econoday consensus: -0.1% quarterly)