Stock futures fell, while bond yields rose alongside the dollar after the latest reading on jobless claims did little to alter bets on the Federal Reserve’s higher-for-longer stance.
(Bloomberg) — Stock futures fell, while bond yields rose alongside the dollar after the latest reading on jobless claims did little to alter bets on the Federal Reserve’s higher-for-longer stance.
S&P 500 contracts signaled the gauge was set to drop below 4,400. Nasdaq 100 futures fell over 1%. Cisco Systems Inc. slipped after agreeing to buy cybersecurity company Splunk Inc. in a $28 billion deal. Broadcom Inc. sank on a report that Alphabet Inc.’s Google is considering dropping the company as a supplier for artificial intelligence chips as soon as 2027. FedEx Corp., a proxy for global growth, rose after a bullish outlook.
The yield on 10-year Treasuries advanced seven basis points to 4.48%. The dollar hit the strongest level since March, climbing against all of its developed-market peers, — except the yen — with the Japanese currency inching closer to the 150 level that some analysts consider to be a trigger for intervention. The pound fell after the Bank of England kept rates unchanged for the first time in almost two years. Germany’s 10-year yield hit the highest since 2011.
Applications for US unemployment benefits fell to the lowest level since January last week, indicating a healthy labor market that continues to support the economy. Initial jobless claims dropped to 201,000. The median estimate in a Bloomberg survey of economists called for 225,000 applications.
“Data dependence remains the pillar of the current policy bias, and an increasingly likely government shutdown that boosts the probability of delayed economic releases makes the Fed’s task even more challenging,” said Ian Lyngen at BMO Capital Markets. “As investors continue to debate whether another tightening move will come to pass in November or December, there is certainly the risk that the information that could have justified a November tightening will not be made available in time for the Committee to hike until the final meeting of the year.”
Bond traders are bracing for Treasury yields to keep pushing higher after the Fed signaled it’s likely to hold interest rates at lofty levels well into next year.
Fifty-eight percent of the 172 respondents in the Bloomberg Markets Live Pulse survey conducted after the Fed’s decision said that 2-year Treasury yields have yet to peak, while a plurality expect 10-year yields to climb over 4.5%. Two-year rates rose above 5.19% Thursday to a fresh 17-year high, while 30-year yields climbed to 4.48%, a level last seen in 2011.
Former Fed Bank of St. Louis President James Bullard said the central bank may need to raise rates further and hold them higher to guard against the risk of a reacceleration of inflation.
Elsewhere, Chinese stocks extended their poor run on Thursday, pushing a key gauge to its lowest since November, as an exodus of foreign funds continued amid persistent concerns about the economy.
Some of the main moves in markets:
- S&P 500 futures fell 0.9% as of 8:39 a.m. New York time
- Nasdaq 100 futures fell 1.3%
- Futures on the Dow Jones Industrial Average fell 0.6%
- The Stoxx Europe 600 fell 1.3%
- The MSCI World index fell 0.7%
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.3% to $1.0631
- The British pound fell 0.7% to $1.2252
- The Japanese yen rose 0.2% to 148.01 per dollar
- Bitcoin fell 1.8% to $26,603.16
- Ether fell 2.3% to $1,587.72
- The yield on 10-year Treasuries advanced seven basis points to 4.48%
- Germany’s 10-year yield advanced seven basis points to 2.77%
- Britain’s 10-year yield advanced 14 basis points to 4.35%
- West Texas Intermediate crude was little changed
- Gold futures fell 1.6% to $1,935.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
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