(Bloomberg) — As the Federal Reserve gets ready to unwind its crisis-era stimulus, prompting a recalibration of bond yields, stocks continue to push lower around the globe.
Most Read from Bloomberg
The S&P 500 was on pace for its biggest decline since May, extending its September selloff. Technology shares — which have led the surge in equities from the depths of the pandemic — underperformed sectors that will likely benefit the most from an economic revival. The yield on Treasury 30-year bonds climbed more than 10 basis points earlier Tuesday.
Fed Chair Jerome Powell told the Senate that the central bank has “all but met” the test to tapering bond buying, while the test for raising rates is substantially higher. Powell added that inflation reflects the mismatch between supply and demand, and he reiterated his views that price pressures should abate.
Read: Warren Says She Opposes Powell for Second Term as Fed Chair
Meantime, Treasury Secretary Janet Yellen warned that her department will effectively run out of cash around Oct. 18 unless legislative action is taken to suspend or increase the federal-debt limit, putting pressure on lawmakers to avert a default on U.S. obligations. She said the world’s largest economy faces recession risks if the debt limit isn’t raised.
The central bank should let its balance sheet shrink next year as soon as it winds down a bond-purchase program, St. Louis Fed President James Bullard told Reuters. High inflation could require more aggressive steps — including two rate increases in 2022, he added.
U.S. consumer confidence dropped in September for a third straight month, suggesting concerns over the delta variant and higher prices continue to dampen sentiment. Home prices surged 19.7% in July — once again posting the biggest jump in more than 30 years.
Elsewhere, Brent erased gains in tandem with weaker broader markets after earlier topping $80 a barrel. The international crude benchmark rose above the key, psychological level for the first time since October 2018 on signs that demand is running ahead of supply and depleting inventories.
Here are some events to watch this week:
-
Japan’s ruling party votes to elect leader, Wednesday
-
Central bank chiefs Andrew Bailey (BOE), Haruhiko Kuroda (BOJ), Christine Lagarde (ECB) and Jerome Powell (Fed) participate in an ECB Forum panel, Wednesday
-
House Financial Services Committee hearing on the Fed, Treasury’s pandemic response, Thursday
-
China Caixin manufacturing PMI, non-manufacturing PMI, Thursday
-
Univ. of Michigan sentiment, ISM manufacturing, U.S. construction spending, spending/personal income, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
-
The S&P 500 fell 1.7% as of 11:27 a.m. New York time
-
The Nasdaq 100 fell 2.5%
-
The Dow Jones Industrial Average fell 1.2%
-
The Stoxx Europe 600 fell 2%
-
The MSCI World index fell 1.6%
-
The Russell 2000 Index fell 1.6%
Currencies
-
The Bloomberg Dollar Spot Index rose 0.5%
-
The euro fell 0.1% to $1.1680
-
The British pound fell 1.1% to $1.3544
-
The Japanese yen fell 0.3% to 111.33 per dollar
Bonds
-
The yield on 10-year Treasuries advanced three basis points to 1.52%
-
Germany’s 10-year yield advanced two basis points to -0.20%
-
Britain’s 10-year yield advanced four basis points to 0.99%
Commodities
-
West Texas Intermediate crude fell 0.4% to $75.18 a barrel
-
Gold futures fell 0.7% to $1,739.30 an ounce
Most Read from Bloomberg Businessweek
©2021 Bloomberg L.P.
