Europe Stocks Drop, Bonds Gain; Treasuries Steady

European Stock Markets

European stocks retreated on Wednesday, shrugging off gains in the Asia session as traders brace for a busy second half of the week. 

The region’s bonds advanced, Treasuries were flat and the dollar extended gains before another round of U.S. debt sales and the release of minutes from the latest Fed meeting.

Almost every sector of the Stoxx Europe 600 Index fell, with the gauge tracking losses in the U.S. on Tuesday rather than the more positive mood in Asia. Stocks rose in Hong Kong, cementing a rebound from one of the worst sell-offs in years at the start of the month. 

S&P 500 Index futures edged lower. Benchmark Treasury yields steadied, but remain near recent highs as the U.S. government continues its a big week for debt auctions.

The Treasury’s $258 billion of auctions slated for this week comes amid surging rates that gave impetus to one of the steepest equity sell-offs in years two weeks ago. 

While investors seem to have adjusted to 10-year yields at a four-year high for now, the deluge of supply could push them higher, weakening the case for owning stocks at elevated valuations.

Investor attention will also be on minutes from the Federal Reserve’s most recent meeting, due Wednesday in New York. On Thursday they will get to parse minutes from the last European Central Bank gathering.

Elsewhere, oil in New York dropped toward $61 a barrel ahead of U.S. government data that’s forecast to show crude inventories gained for a fourth week. Bitcoin slipped, but pared its decline to hover above $11,000.