? Bonds fall with central banks in focus.
? Dollar weaker against the euro.
? European stocks track Asian weakness.
? S&P 500 set to open flat to lower.
Bonds fell as investors awaited interest rate decisions this week from the central banks of Japan and the U.K. and the U.S. Federal Reserve. The dollar depreciated against the euro, European stock markets retreated and futures pointed to a slightly lower opening for the Wall Street.
Ten-year German Bund yields climbed 3 basis points to 0.437% by 6:59 a.m. ET. U.S. Treasurys fell as 10-year yields added 3 basis points to 2.985%.
"Downside risks from trade tensions have not yet altered the Fed's resolve to follow a gradual course of tightening," while incoming economic data also underpins the resolve, according to Morgan Stanley Research. "The [Federal Open Market Committee] can use this meeting to discuss the balance sheet and prepare for upcoming changes to its forward guidance."
Ten-year yields on Japanese government bonds were broadly stable at 0.103% as the central bank began a crunch meeting, after reports it could adjust its ultraloose policy.
"In our view, speculation that the Bank of Japan is preparing to dial back its ultraloose monetary policy is misplaced," according to a research note from Capital Economics.
While the bank is expected to maintain its policy settings July 31, "it is difficult to see the board talking taper and [yield curve] "flexibility" when last week's [bond] selloff was met with two separate "unlimited" purchases by the BoJ," TD Securities noted.
The Bloomberg dollar spot index lost 0.14% to 94.532. Despite the dollar's weakness following the initial estimate for second-quarter U.S. GDP, "we still think that healthy growth in the U.S. over the rest of this year will allow the Fed to keep hiking rates once a quarter, ultimately lending the currency some support," Capital Economics said in a separate note.
The euro appreciated 0.24% and the yen and sterling were little changed against the dollar.
"Unless the Bank of England hikes rates and boosts expectations in the market for additional hikes, the increased risks of a Brexit without an agreement will likely continue to weigh on sterling," Brown Brothers Harriman said in a note to investors.
The Euro Stoxx 50 was down 0.34% and the FTSE 100 lost 0.12%. Earlier, the Shanghai SE Composite slipped 0.16% and Hong Kong's Hang Seng Index fell 0.25%, weighed down by the 1.46% drop in the tech-heavy Nasdaq Composite on July 27.
"Disappointing guidance from Facebook Inc. and Twitter Inc., following on from a poorly received update from Netflix Inc., has caused some investors to question the basic assumptions around those company's growth models, and whether they are sustainable at their current levels," said Michael Hewson of CMC Markets UK.
Futures pointed to the S&P 500 opening 0.06% lower.
Brent crude oil rose 0.4% on the ICE Futures Exchange to $74.59 per barrel. Gold slipped 0.18% to $1,230.40 per ounce.
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The day ahead:
8 a.m. ET — Germany CPI (Econoday consensus: 0.4% monthly, 2.1% yearly)
10 a.m. ET — U.S. pending home sales index (Econoday consensus: 0.8% monthly)
10:30 a.m. ET — Dallas Fed manufacturing survey (Econoday consensus: 32.0)
3 p.m. ET — U.S. farm prices
7:30 p.m. ET — Japan unemployment rate (Econoday consensus: 2.3%)
7:50 p.m. ET — Japan industrial production (Econoday consensus: -0.4% monthly)
9 p.m. ET — China FLP manufacturing PMI (Econoday consensus: 51.3)