(Bloomberg) — U.S. futures edged down and European stocks fell on Thursday as traders awaited remarks from Federal Reserve Chairman Jerome Powell following a renewed bout of bond volatility. Treasuries were steady.
S&P 500 and Nasdaq 100 contracts declined though came off their lows of the session, spurred by the 10-year Treasury yield approaching 1.5% on Wednesday and rising inflation expectations. In an appearance at a Wall Street Journal webinar later today, Powell is expected to push back on bond-market concerns, saying the central bank will be ultra-patient in withdrawing its support for the economy after the pandemic has ended.
The Stoxx 600 Index slipped 0.8%, dragged down by tech and miners as gold held near a nine-month low. MSCI Inc.’s Asia-Pacific gauge had its worst decline this week. The technology sector struggled while real estate, finance and energy shares outperformed amid a shift to value segments.
The rise in inflation expectations and long-term borrowing costs is stoking volatility and raising concern that a prolonged rally in equity markets may be in jeopardy. Investors are trying to assess central banks’ appetite to buy more longer-dated bonds to keep financial conditions loose. The focus turns to Powell’s upcoming comments, after Chicago Fed President Charles Evans said the recent climb in yields reflected economic optimism.
“Inflation is a concern; there is a lot of money sloshing around the system and it makes sense to have some sort of a correction right now,” said Shana Sissel, Spotlight Asset Group chief investment officer. “And bond yields going up is the market’s implicit way of tightening since the Fed has made it clear they don’t have the intention of doing so.”
Read: U.S. Inflation Expectations Hit Decade High as Yields Resurge
Democratic leaders in the Senate are working to consolidate support for the $1.9 trillion stimulus bill, which is expected to spur growth. The U.S. economy expanded modestly in the first two months of the year and vaccinations are aiding business optimism, according to the Federal Reserve’s Beige Book.
Some key events to watch this week:
OPEC+ meeting on output Thursday.U.S. factory orders, initial jobless claims and durable goods orders are due Thursday.Federal Reserve Chairman Jerome Powell speaks Thursday.The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.
These are some of the moves in markets:
Stocks
Futures on the S&P 500 Index decreased 0.3% as of 7:05 a.m. New York time.The Stoxx Europe 600 Index dipped 0.8%.The MSCI Asia Pacific Index fell 1.9%.The MSCI Emerging Market Index declined 1.9%.
Currencies
The Bloomberg Dollar Spot Index rose 0.1%.The euro fell 0.2% to $1.2037.The British pound dipped 0.1% to $1.3943.The onshore yuan was little changed at 6.468 per dollar.The Japanese yen weakened 0.3% to 107.34 per dollar.
Bonds
The yield on 10-year Treasuries declined two basis points to 1.46%.The yield on two-year Treasuries climbed less than one basis point to 0.14%.Germany’s 10-year yield fell two basis points to -0.31%.Britain’s 10-year yield sank four basis points to 0.743%.Japan’s 10-year yield rose one basis point to 0.132%.
Commodities
West Texas Intermediate crude was little changed at $61.27 a barrel.Brent crude dipped 0.1% to $64.01 a barrel.Gold strengthened 0.3% to $1,715.54 an ounce.
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