Stocks rebound, but bond selloff keeps investors on edge

Sept 3 (Reuters) - Wall Street stocks recovered some ground on Wednesday after Alphabet gained on a favorable antitrust ruling, while investors mulled softer-than-expected labor market data that could influence the U.S. central bank's upcoming interest-rate decision.

Job openings, a measure of labor demand, dropped 176,000 to 7.181 million by the last day of July, the Labor Department's Bureau of Labor Statistics said in its "JOLTS" report on Wednesday. Economists polled by Reuters had forecast 7.378 million unfilled jobs.

The Dow Jones Industrial Average (.DJI), opens new tab dipped 0.3%, the S&P 500 (.SPX), opens new tab rose 0.4%, and the Nasdaq Composite (.IXIC), opens new tab added 1%. Alphabet (GOOGL.O), opens new tab jumped around 8%, while Apple (AAPL.O), opens new tab also gained about 3% as the ruling allowed Google to continue lucrative payments to the iPhone maker.

At the same time, a sell-off in global long-dated bonds sent Japan's government borrowing costs to record highs on Wednesday, as mounting concerns over government debt sustainability and long-term inflation also rattled investors in Europe.

Spot gold hit an all-time high of $3,563 as the rush out of long-term government debt, traditionally considered low-risk, sparked a hunt for alternative safe-haven assets.

The 30-year Japanese government bond yield hit an unprecedented 3.28% on Wednesday, following a sell-off in similarly dated British gilts , U.S. Treasuries and Canadian bonds in the prior session.

"The economic reforms needed to really cover increasing debt are lacking, and the capital market sees that," Deutsche Bank chief executive Christian Sewing said about the long-dated debt sell-off in comments at a conference on Wednesday morning.

The trend may continue, he added, "if we see a further increase in political instability, if we don't see any reforms".

British finance minister Rachel Reeves is expected to raise taxes in her autumn budget to remain in line with her fiscal targets, while in France Prime Minister Francois Bayrou looks set to lose a confidence vote as opposition parties balk at his spending cuts.

In Japan, government departments have just presented record budget requests and senior aides to Prime Minister Shigeru Ishiba, including Secretary-General Hiroshi Moriyama, have offered to resign following their party's defeat in July's upper house election.

On Wednesday, British 30-year gilt yields rose 6 basis points to a fresh post-1998 high of 5.752%, before recovering to last trade at 5.6%.

Germany's 30-year yield stood at 3.36%, remaining close to its highest level in 14 years.

The global trend would likely feed on itself, some analysts said, because higher yields in Japan meant Japanese savers who had for decades looked to overseas assets for income now had fewer reasons to buy non-domestic government debt.

"Global bond markets no longer benefit from the Japanese hunt for yield," L&G Asia head of investment strategy Ben Bennett said. "It’s a perfect storm for long-dated bonds and a headache for governments."

By Lawrence Delevingne and Naomi Rovnick

https://www.reuters.com/