US Treasuries advanced and equity futures wavered after consumer spending rose more than expected and a key inflation metric picked up steam.
(Bloomberg) — US Treasuries advanced and equity futures wavered after consumer spending rose more than expected and a key inflation metric picked up steam.
The 10-year Treasury yield tumbled 10 basis points, offering some respite to equities that have been roiled by debt market volatility this week. Contracts on the S&P 500 fluctuated along with those on the Nasdaq 100. The dollar strengthened after reversing an earlier loss.
Markets are on the edge as traders expect the latest economic data that released Friday will keep the Fed on its path of aggressive rate hikes. A bruising session on Wall Street Thursday had already taken the S&P 500 down 2% to the lowest in almost two years and sent the Nasdaq 100 tumbling almost 4%. The S&P 500 Index is headed for its third straight quarter of losses for the first time since 2009 and the Nasdaq 100 Stock Index for the first time in 20 years.
Fears of global recession are mounting as the threat of higher rates saps growth. The case of the UK shows how faultlines between government and central bank policy on tackling inflation can erupt into a crisis. Hopes evaporated that the British government would succumb to pressure to back down from tax cuts that brought the pound to the edge of dollar parity.
The pound renewed its tumble as it emerged the UK Treasury hasn’t asked its fiscal watchdog to accelerate its economic forecast, suggesting that the government has no plans to backtrack on the economic strategy roiling markets.
Read more: UK Treasury Hasn’t Sought to Speed Up Budget Watchdog’s Forecast
Now traders are gauging the next pressure points that will further erode gains won by the Bank of England’s billions in bond-market buying in the past two days.
Global equity funds garnered inflows of $7.6 billion in the week to Sept. 28, according to data compiled by EPFR Global. Bonds had $13.7 billion of outflows in the week, while $8.9 billion flowed into US stocks, the data showed.
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Key events this week:
- Euro zone CPI, unemployment, Friday
- US consumer income , University of Michigan consumer sentiment, Friday
- Fed’s Lael Brainard and John Williams speak, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.1% as of 8:49 a.m. New York time
- Futures on the Nasdaq 100 were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 rose 0.4%
- The MSCI World index fell 1.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.5% to $0.9769
- The British pound fell 0.3% to $1.1085
- The Japanese yen was little changed at 144.48 per dollar
Cryptocurrencies
- Bitcoin fell 1.2% to $19,268
- Ether fell 0.9% to $1,325.7
Bonds
- The yield on 10-year Treasuries declined 10 basis points to 3.69%
- Germany’s 10-year yield declined nine basis points to 2.09%
- Britain’s 10-year yield declined nine basis points to 4.06%
Commodities
- West Texas Intermediate crude fell 1% to $80.43 a barrel
- Gold futures rose 0.4% to $1,674.80 an ounce
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