US futures held declines and Treasury yields stayed higher after the latest batch of data pointed to a resilient economy. The dollar spot index was steady.
(Bloomberg) — US futures held declines and Treasury yields stayed higher after the latest batch of data pointed to a resilient economy. The dollar spot index was steady.
Applications for US unemployment insurance fell for a fifth straight week, suggesting demand for workers remains healthy despite an uncertain economic outlook, data showed Thursday. Retail sales unexpectedly rose in August after declining a month earlier, as the underlying picture of spending proved more mixed. The reports came after Tuesday’s consumer inflation jolt saw wagers for rate increases ratchet higher and stocks slump the most in two years.
“Markets seem torn between a bearish sentiment on one hand, supported by lingering macro threats in a tighter liquidity environment, and dip buyers on the other who continue to bet on the inflation peak,” said Pierre Veyret, an analyst at ActivTrades. “Most benchmarks aren’t registering strong and significant bullish corrections following Tuesday’s sell-off, but continue to trade sideways in a volatile manner, which highlights the ‘wait and see’ situation ahead of today’s new batch of US data, tomorrow’s EU CPI report and next week’s Fed decision on rates.”
Swaps traders are pricing in a 75 basis point hike when the Fed meets next week, with some wagers appearing for a full-point move. The continued rise in rate-sensitive Treasuries deepened the curve inversion — a harbinger for a looming recession — to a level unseen this century.
Read More: US 2- to 30-Year Curve Reaches Most Inverted Level This Century
Stocks in Europe dropped for a third day, with retailers and energy companies leading the decline as banks gained.
Asian currencies remained at risk from a strong greenback. The offshore yuan weakened past 7 per dollar for the first time since July 2020. The yen declined to trade around 143.6 per dollar after it rallied away from just under the closely-watched 145 level Wednesday on signs the Bank of Japan was preparing an intervention.
Oil declined as traders grappled with concerns about global demand and assessed comments from the US on refilling strategic reserves. Natural gas increased as traders assessed Europe’s steps to contain the energy crisis, with governments making plans to shut down power in some places to avoid a total collapse of the system this winter. Gold fell.
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Here are some key events to watch this week:
- China home sales, retail sales, industrial production, fixed assets, surveyed jobless rate, Friday
- Euro area CPI, Friday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.1% as of 8:40 a.m. New York time
- Futures on the Nasdaq 100 fell 0.3%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $0.9995
- The British pound fell 0.4% to $1.1490
- The Japanese yen fell 0.3% to 143.47 per dollar
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.43%
- Germany’s 10-year yield advanced three basis points to 1.74%
- Britain’s 10-year yield was little changed at 3.14%
Commodities
- West Texas Intermediate crude fell 2% to $86.70 a barrel
- Gold futures fell 1% to $1,692 an ounce
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