Treasury Rally Holds, Raising Stock Futures – Europe Market Wrap
US stock futures jumped as anticipation of Fed interest rate reduction fuelled gains, while Treasuries fell following a rally that propelled global bonds into bull market territory.
In premarket trading, rate-sensitive tech stocks gained, pushing S&P 500 contracts up by 0.1%. The yield on 10-year Treasuries increased 2 bps to 4.06%. The Dollar fell for the third day in a row, with the Yen leading major currency gains on further hints of policy tightening from the BoJ.
The changes to BLS payroll figures for the year through March on Tuesday are expected to strengthen the case for a US jobs slowdown. Later this week, the core consumer price index for August is expected to rise 0.3% for the second month in a row, showing that progress towards lowering pricing pressures has stopped.
In Europe, the Stoxx 600 rose somewhat as investors awaited the next moves in France’s financial recovery efforts. The S&P 500 and US bonds have surged as traders increase their wagers that the Fed will begin rate cuts this month. Despite evident weaknesses in the labour market, investors believe the economy is still strong enough to support corporate profitability.
Oil increased for the second day in a row as investors considered the possibility of decreasing demand after Saudi Arabia reduced pricing for the majority of its grades. Iron ore rose for the sixth day in a row, heading for its best finish in more than six months, as Chinese demand is expected to go up.
