US futures wavered as investor sentiment swung between hopes that inflation has peaked and concern that large interest-rate hikes by the Federal Reserve will hamper economic growth. Treasury yields rose and the dollar was steady.
(Bloomberg) — US futures wavered as investor sentiment swung between hopes that inflation has peaked and concern that large interest-rate hikes by the Federal Reserve will hamper economic growth. Treasury yields rose and the dollar was steady.
Contracts on the S&P 500 and Nasdaq 100 fluctuated before turning lower, with the latter underperforming after the underlying gauges posted modest rallies on Wednesday. European stocks were flat, while the MSCI Asia Pacific Index reversed earlier gains to trade down.
Traders remain focused on US economic data, with a decline in producer prices there providing some relief after Tuesday’s consumer inflation jolt saw wagers for rate increases ratchet higher and stocks slump the most in two years. Jobs, manufacturing and retail numbers later Thursday will be parsed for clues on the strength of the economy and inflation expectations.
“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
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:
- US business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- 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 0.2% as of 7:57 a.m. New York time
- Futures on the Nasdaq 100 fell 0.4%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was little changed at $0.9986
- The British pound fell 0.4% to $1.1493
- The Japanese yen fell 0.3% to 143.51 per dollar
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.45%
- Germany’s 10-year yield advanced three basis points to 1.74%
- Britain’s 10-year yield advanced two basis points to 3.15%
Commodities
- West Texas Intermediate crude fell 1.3% to $87.34 a barrel
- Gold futures fell 0.8% to $1,695.70 an ounce
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