(Bloomberg) — Nasdaq 100 futures rose and Asian stocks fluctuated as investors evaluated a pullback in Treasury yields at the start of the week. Turkey’s lira tumbled after the country’s central bank governor was ousted.
S&P 500 contracts and European futures dipped after Asian shares posted a mixed performance, with Chinese stocks rallying and Japanese equities sliding. The dollar ticked up and oil was steady after a bruising week.
The Turkish lira slumped as much as 15% and stocks slid after President Recep Tayyip Erdogan removed the country’s third central bank chief in less than two years. The nation said it will continue to stick to free markets and a liberal foreign-exchange regime.
The 10-year U.S. Treasury yield fell back to 1.66% from the highest levels in about 14 months following soothing comments from Federal Reserve officials. A slate of auctions this week could be a catalyst for a renewed rise in rates.
Investor concerns that a stronger economic recovery could lead to much higher inflation are dominating equity and bond markets. Some suspect price pressures could force the Federal Reserve to tighten monetary policy sooner than current guidance suggests. The selloff in bonds has propelled yields higher in recent weeks and fueled a rotation out of growth into value shares.
Fed Chairman Jerome Powell reiterated in a Wall Street Journal editorial that the central bank will provide aid to the economy “for as long as it takes.” Richmond Fed President Thomas Barkin said in a Bloomberg TV interview Sunday that there is no sign yet of unwanted inflation pressures.
“Clearly, the market is skeptical that the Fed will be able to keep interest rates at current levels for the next three years,” Diana Mousina, senior economist in the multi-asset group at AMP Capital Investors Ltd., said in a note. “We think that nominal bond yields can still shoot higher in the short-term towards 2% and above on inflation concerns. Markets are likely to worry that this move is permanent, rather than temporary.”
A central-bank exemption that allowed lenders load up on Treasuries and deposits without setting aside extra capital to cushion losses will lapse March 31. The regulator also said it plans further changes to this supplementary leverage ratio, or SLR.
Meanwhile, the European Union is set to block exports of the AstraZeneca Plc vaccine to the U.K. until the drugmaker fulfills delivery obligations to the bloc.
These are some key events to watch this week:
Fed Chair Powell is due Monday at the BIS Innovation Summit. The ECB’s Christine Lagarde, BOE’s Andrew Bailey and chiefs of Sweden, Canada, Mexico and Brazil all follow.Powell and Treasury Secretary Janet Yellen are expected to make their first joint appearance before the U.S. House Financial Services committee to testify on Fed and Treasury pandemic policies Tuesday.The U.S. Treasury holds auctions of two-, five- and seven-year debt.EIA crude oil inventory report on Wednesday.Friday, February U.S. personal income and spending data comes in the wake of $600 stimulus checks but before the latest round of $1,400 payments began hitting Americans’ bank accounts.
These are some of the main moves in financial markets:
Stocks
S&P 500 futures were down 0.1% as of 7:05 a.m. in London. Nasdaq 100 futures rose 0.4%.Japan’s Topix Index fell 1.1%.Australia’s S&P/ASX 200 Index gained 0.7%.South Korea’s Kospi Index dropped 0.1%.Hong Kong’s Hang Seng Index fluctuated.China’s CSI 300 Index rose 1%.Euro Stoxx 50 futures fell 0.3%.
Currencies
The yen rose 0.1% to 108.76 per dollar.The Bloomberg Dollar Spot Index advanced 0.2%.The euro fell 0.2% to $1.1877.The pound dropped 0.2% to $1.3844.
Bonds
The yield on 10-year Treasuries fell about six basis points to 1.66%.Australia’s 10-year bond yield fell about four basis points to 1.76%.
Commodities
West Texas Intermediate crude fell 0.4% to $61.16 a barrel.Gold fell 0.9% to $1,729.50 an ounce.
(A previous version corrected the extent of the Turkish lira’s decline.)
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