Stocks slipped along with US equity futures Thursday as investors weighed the risk of faster rate hikes. Treasury yields steadied near the 4% mark.
(Bloomberg) — Stocks slipped along with US equity futures Thursday as investors weighed the risk of faster rate hikes. Treasury yields steadied near the 4% mark.
The Stoxx Europe 600 fell 0.3% while contracts for the rate-sensitive Nasdaq 100 slid 0.5%. Among individual movers, Credit Suisse Group AG fell for the fourth day, set for the longest losing streak since Dec. 20, after it delayed the publication of its annual report and compensation details for 2022.
Investors continue to digest Jerome Powell’s signaling on further rate hikes and the risk of recession that comes with this. While the Federal Reserve chief told lawmakers Wednesday that no decision had been made on the pace of the next move, he reiterated that an acceleration in tightening was still on the table and rates may go higher than anticipated should economic data warrant.
The comments coincided with another round of US jobs figures that came in on the hot side, bolstering bets that policymakers will remain hawkish.
Benchmark Treasury yields traded little changed around an elevated threshold of 4% while the dollar fell slightly within sight of its high for the year.
On Wednesday, yields on shorter-term notes continued to rise faster than longer-maturity peers, with the inversion between the 2- and 10-year yields reaching more than 110 basis points. Wagers solidly tilted toward a half-point move in March rather than a quarter-point.
Friday’s jobs report will be scrutinized for hints on the outlook for Fed policy, with even just slightly stronger-than-forecast figures likely to trigger more bets for a bigger hike.
Carol Schleif at BMO Family Office said that with so much focus on the jobs market and its implications for this month’s Fed decision, some investors were overlooking part of the big picture.
“It’s keeping the focus so short-term,” she said on Bloomberg Television. “We’re missing the intermediate and longer-term strength in the economy.”
Elsewhere in markets, oil held losses on expectations for higher interest rates, despite an unexpected decline in US crude inventories.
Key events this week:
- US Challenger job cuts, initial jobless claims, household change in net worth, Thursday
- Bank of Japan policy rate decision, Friday
- US nonfarm payrolls, unemployment rate, monthly budget statement, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 0.3% as of 8:24 a.m. London time
- S&P 500 futures fell 0.2%
- Nasdaq 100 futures fell 0.5%
- Futures on the Dow Jones Industrial Average fell 0.1%
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index fell 0.7%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.0553
- The Japanese yen rose 0.6% to 136.54 per dollar
- The offshore yuan fell 0.2% to 6.9802 per dollar
- The British pound was little changed at $1.1853
Cryptocurrencies
- Bitcoin fell 1.7% to $21,636.85
- Ether fell 1.2% to $1,534.58
Bonds
- The yield on 10-year Treasuries was little changed at 4.00%
- Germany’s 10-year yield advanced five basis points to 2.69%
- Britain’s 10-year yield advanced five basis points to 3.81%
Commodities
- Brent crude fell 0.1% to $82.57 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Farah Elbahrawy.
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