US Futures Fall Against Fed Caution, Yields Rising: Markets Wrap Up

(Bloomberg) – US stock futures fell Monday and Treasury yields rose as a cautious tone from a Fed speaker mitigated some of the exuberance that inflation may have peaked.

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Contracts on the high-tech Nasdaq 100, typically more sensitive to interest rates, fell 0.7% while those on the S&P 500 fell 0.4%. Losses in New York’s pre-market trading were concentrated in the tech names, with Tesla Inc., chip companies Nvidia Corp., Intel Corp and Micron Technology Inc. down between 1% and 2%. The European Stoxx 600 benchmark rose to a nearly three-month high, and Chinese stocks rose for a second day in hopes that the country’s Covid-zero isolation would soon end.

The dollar rose after Federal Reserve Governor Christopher Waller’s remarks over the weekend that politicians had “a way to go” before ending interest rate hikes. His comments also helped raise 10-year Treasury yields by more than 8 basis points.

While signs of cooling US inflation and prospects of a dovish bias from the Fed had pushed the S&P 500 into its best week since June, some of the world’s largest money managers are holding on to a risk-reducing stance. against the threat of entrenched inflation. JPMorgan Asset Management has a record cash allocation in at least one of its strategies, while a hedge fund solutions team at UBS Group AG remains on the defensive.

“The markets have read too much in a data print, inflation in the US has slowed but it is not slow,” said Salman Ahmed, Fidelity International’s chief investment strategist. “The Fed will need more data to re-evaluate the end point for rates.”

Read more: Wall Street executives are rejecting easing inflation hopes

The University of Michigan’s November preliminary survey on Friday showed that US consumer inflation expectations rose in the short and long term as sentiment receded. The dollar was up 0.5% against a basket of currencies after losing nearly 4% this month.

To be sure, while Waller said the hiking cycle would continue for some time, he noted that the Fed could start considering a bearish move to a 50 basis point move at the next December meeting or that. following.

Meanwhile, Chinese developer stocks and bonds have soared, propelled by Beijing property bailout measures and easing Covid controls that give hope that the worst may end. Country Garden real estate company grew up to 46% in Hong Kong, while the offshore-traded yuan strengthened 1% against the dollar at one point.

“There are still a lot of risks, but it looks like some of the tail risk has been cut,” said Stephen Chang, chief executive and portfolio manager of Pimco Asia Ltd., in an interview with Bloomberg TV.

Investors will also be keeping an eye on the Group of 20 Summit in Indonesia, where US President Joe Biden and Chinese leader Xi are expected to meet. Biden’s hand was strengthened by Democrats who defied political predictions and historical trends to maintain control of the Senate.

Cryptocurrencies have fluctuated as the sector has remained under pressure due to growing FTX problems. A quick dip in the value of FTX’s leading crypto assets and unauthorized withdrawals of funds after it filed for bankruptcy suggest that customers have little chance of recovering much of their deposits.

Oil fell after a two-day rally as a stronger dollar offset optimism about the prospects for improving Chinese demand.

Key events this week:

  • US President Joe Biden plans to meet Chinese President Xi Jinping on the sidelines of the G-20 on Monday.

  • The Fed’s John Williams moderation panel on Monday

  • China Retail Sales, Industrial Production, Unemployment Interviewed, Tuesday

  • Former US President Donald Trump plans to make an announcement on Tuesday

  • US Empire Production, PPI, Tuesday

  • US Commercial Inventories, Cross-Border Investing, Retail Sales, Industrial Manufacturing, Wednesday

  • Fed’s John Williams, Lael Brainard, and SEC President Gary Gensler speak Wednesday

  • ECB President Christine Lagarde speaks on Wednesday

  • Eurozone CPI, Thursday

  • US housing starts, initial jobless claims, Thursday

  • Neel Kashkari of the Fed, Loretta Mester speaking, Thursday

  • US Conference Board Main Index, Existing Home Sales, Friday

Some of the main moves in the markets:

Actions

  • The Stoxx Europe 600 was up 0.2% at 10:24 am London time

  • S&P 500 futures fell 0.4%

  • Nasdaq 100 futures fell 0.7%

  • Futures on the Dow Jones Industrial Average fell 0.3%

  • MSCI Asia Pacific Index fell 0.3%

  • MSCI Emerging Markets Index Up 0.4%

Currencies

  • Bloomberg Dollar Spot Index Up 0.5%

  • The euro fell 0.4% to $ 1.0301

  • The Japanese yen fell 1.1% to 140.31 per dollar

  • The offshore yuan rose 0.4% to 7.0659 per dollar

  • The British pound fell 0.5% to $ 1.1776

Cryptocurrencies

  • Bitcoin is up 2.1% to $ 16,716.68

  • Ether rose 3.2% to $ 1,255.34

Bonds

  • 10-year Treasury yield climbed seven basis points to 3.88%

  • Germany’s 10-year yield fell five basis points to 2.11%

  • Britain’s 10-year yield fell seven basis points to 3.29%

Goods

  • Brent crude fell 0.8% to $ 95.18 a barrel

  • Spot gold fell 0.8% to $ 1,757.82 an ounce

This story was produced with the assistance of Bloomberg Automation.

– With the assistance of Tassia Sipahutar.

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