Rising rates are good for banks because they increase the gap between what banks charge on loans and what they pay for deposits, a spread known as the net interest margin.
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Moreover, a group of buyers known as direct bidders-which typically include buy-side accounts like mutual funds, life insurance companies, hedge funds and pension funds, among others-bought 32.5% of the auctioned notes, the highest percentage since October 2012, according to data from BMO Capital.
Treasuries were little changed Wednesday, with the benchmark 10-year yield at 1.86 percent as of 12:45 p.m.in Tokyo, according to Bloomberg Bond Trader data.
MSCI (NYSE: MSCI – news) ‘s all-country world stock index was up 1 percent, while the pan-European FTSEurofirst 300 index of leading regional stocks ended up 2.3 percent.
The Nasdaq composite index surged 58 points, or 1.2 percent, to 4,823. Malaysia’s oil-linked ringgit depreciated to a 10-week low against the United States dollar because weakness in crude oil prices spark concern about the nation’s finances.
An auction of newly issued two-year Treasurys on Tuesday saw the strongest buy-side demand since October 2012, defying the notion that investors would be reluctant to buy USA government debt fearing an interest-rate increase in June. When interest rates go up, as they have been recently, banks can make more money from lending.
Bank of America, JPMorgan and Citigroup were all up more than 1.5 percent each. The Richmond manufacturing index for May stood at -1, a stark divergence from 9 figure that was estimated. The price of the 1.625 percent security due in May 2026 was 97 27/32.
DSW Inc. tumbled almost 12 percent after the discount shoe retailer missed Wall Street expectations for profit and revenue in its first-quarter financial results, and cut its full year guidance. Nationwide home sales also rose to their highest level in eight years. That made Best Buy the latest retailer to disclose disappointing quarterly results. USA new home sales data was much stronger than expected with an increase in sales to the highest level in 8 years an annual rate of 619,000, maintaining expectations of Fed action. The June speech will come three days after the May jobs report, and just over a week before the Fed’s June policy meeting.
OVERSEAS: France’s CAC 40 added 2 percent while Germany’s DAX gained 1.8 percent. Britain’s FTSE 100 rose 1 percent to 6,197.51. Spot gold was down 0.9 per cent at $1,236.81 an ounce at 1340 GMT, off an earlier low of $1,235.35.
Turning to USA markets, the Dow Jones industrial average and S&P were up 1.2 percent and 1.4 percent respectively, while the dollar strengthened 0.7 percent to $1.1147 against the euro.
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The dollar rose 0.6% against the yen to Yen109.942.
