Stock Futures Warn The Feds Against Rising Rates

Stock Futures Warn The Feds Against Rising Rates by WSJRenewal

US stock futures fell on Monday as we saw Treasury yields rise, all after a Fed speaker tempered some of the fizzes that inflation may have peaked.

Much of the stock market in the heavy industry sector (Nasdaq 100) seem to have been affected by the change in rates, while the tech companies in the S&P 500, like Tesla Inc, Nvidia Corp, and intel, lost 1.5%.

This weekend the Governor of the Federal Reserve, Christopher Waller, caused the dollar to rise after his comments. He mentioned that politicians “had a long way to go” before ending interest rate hikes. At the same time, this helped lift 10-year Treasury yields by 9 basis points.

The S&P 500 had its best week since June, thanks to signs of cooling in US inflation and a dovish Fed tilt, with some of the world’s largest money managers clinging to money-aversion positioning. Risk against the threat of entrenched inflation. JPMorgan Asset Management has a record cash allocation in at least one of its strategies, while a hedge fund solutions team at UBS Group AG remains on the defensive.

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Salman Ahmed, the chief investment strategist at Fidelity International, said, “Markets have been reading too much into a data print, US inflation has slowed, but it is not slow.” “The Fed will need more data to reassess rate endpoint.”

The University of Michigan, in its preliminary survey this month, showed that US consumer inflation expectations increased in the short and long term, pushing back confidence. The dollar rose 0.6%.

Although Christopher Waller said the hikes by the Fed would continue for some time, he said the Fed might consider a move down to 50 basis points at the next meeting.

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Chinese stocks and bonds soared, buoyed by Beijing’s property bailout measures and as the relaxation of Covid controls raises hopes the worst is over. Real estate firm Country Garden jumped as much as 46% in Hong Kong, while the foreign-traded yuan strengthened 1% against the dollar.

Stephen Chang, director of Pimco Asia Ltd., said, “There are still a lot of risks, but it seems that some of the ultimate risks have been removed” in an interview with Bloomberg TV.

At the 20-member summit in Indonesia, where US President Joe Biden and Chinese leader Xi are expected to meet, investors will be watching. Biden’s hand has been strengthened by Democrats who defied political forecasts and historical trends to maintain control of the Senate.

Following FTX’s bankruptcy, the wave of problems, and consumer loss of confidence, Binance Holdings Ltd has established a way to restore consumer confidence, after the $200 billion lost last week Crude has dropped after a two-day rally; the dollar value has offset optimism around the outlook for improved Chinese demand.

Key events this week:

  • US President Joe Biden plans to meet Chinese President Xi Jinping on the sidelines of the G-20, Monday
  • Fed’s John Williams moderates panel, Monday
  • China retail sales, industrial production, surveyed jobless, Tuesday
  • Former US President Donald Trump plans to make an announcement, Tuesday
  • US empire manufacturing, PPI, Tuesday
  • US business inventories, cross-border investment, retail sales, industrial production, Wednesday
  • Fed’s John Williams, Lael Brainard and SEC Chair Gary Gensler speak, Wednesday
  • ECB President Christine Lagarde speaks, Wednesday
  • Eurozone CPI, Thursday
  • US housing starts, initial jobless claims, Thursday
  • Fed’s Neel Kashkari, Loretta Mester speak, Thursday
  • US Conference Board leading index, existing home sales, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.2%
  • Futures on the Nasdaq 100 fell 0.6%
  • Futures on the S&P 500 fell 0.4% as of 7:16 a.m. New York time
  • The MSCI World index fell 0.1%
  • Futures on the Dow Jones Industrial Average fell 0.2%

Currencies

  • The euro fell 0.7% to $1.0277
  • The Bloomberg Dollar Spot Index rose 0.6%
  • The Japanese yen fell 1.3% to 140.57 per dollar
  • The British pound fell 0.6% to $1.1758

Cryptocurrencies

  • Ether rose 2.9% to $1,252.05
  • Bitcoin rose 1.9% to $16,676.09

Bonds

  • Britain’s 10-year yield declined six basis points to 3.30%
  • The yield on 10-year Treasuries advanced nine basis points to 3.90%
  • Germany’s 10-year yield declined three basis points to 2.13%

Commodities

  • Gold futures fell 0.6% to $1,759.40 an ounce
  • West Texas Intermediate crude fell 1.4% to $87.73 a barrel