The Day Ahead: G20 Takes on Global Imbalances, Inflation

The bellwether 10-year Treasury is yielding 3.59% this morning, after firming five basis points to 3.57% on Thursday.

Equity futures are flat this morning as Ben Bernanke and others get underway to discuss global imbalances and inflation at the G20 meeting of central bankers and finance ministers in Paris.

After the S&P 500 closed at its highest level since June 2008 yesterday, futures are now 0.1 points up at 1,337.90. while Dow futures are trading 6 points lower at 12,282.

The S&P 500 has roughly doubled for its March 2009 low, but remains 17% below its all-time high in October 2007, say economists at BMO Capital Markets. The Dow finished north of 12,300 for the first time since June 13, 2008.

“While the steadily climbing equity market has drawn much attention, Treasuries have also carved out a modest rally in the past week with the 10-year rate declining a dozen basis points to 3.59% since last Tuesday,” said economists at BMO.

Commodity prices are mixed. Light crude oil is 0.05% down at $86.32 per barrel, while gold prices are 0.06% higher at $1,375.90 per ounce, and natural gas prices are 0.34% lower at $3.86 per MMBtu.

China, still struggling with high inflation, announced for the second time this year it will raise bank reserve requirements, this time by 50 basis points. Economists at BMO noted this is the fifth hike since October.

Key Events Today:

No significant data.

8:00 ― Ben Bernanke, chairman of the Federal Reserve, speaks on global imbalances and financial stability at the Banque de France Financial Stability Review, in Paris. His speech is called “Global Imbalances and Financial Stability.” A Q&A is expected.