US Equity Futures Slip; Nasdaq 100 Shorts Build: Markets Wrap

Stock markets retreated Tuesday as investors priced in a protracted period of high interest rates. A selloff in government bonds paused and the dollar steadied.

(Bloomberg) — Stock markets retreated Tuesday as investors priced in a protracted period of high interest rates. A selloff in government bonds paused and the dollar steadied.

US equity futures slipped, poised to give back Monday’s modest gains. Shares in Europe retreated for a fourth day, putting the MSCI All Country World Index, one of the broadest measures of global equities, on track to match its longest losing streak in the past decade. 

Yields on Treasuries and European government debt dropped after hitting decade highs. The Bloomberg dollar index was little changed following its strongest close since December. Oil retreated as the impact of a rising dollar sapped demand.

The threat of tight policy is undoing some of the market’s biggest gains this year, in high-flying tech stocks. These growth companies are prized for their long-term prospects but hold less appeal when future profits get discounted at higher rates. That’s reflected in growing short positions against the technology-heavy Nasdaq 100 Index.

One Fed speaker after another in the past week has delivered emphatic messages that they will keep policy tighter for longer if the economy is stronger than expected. Federal Reserve Bank of Minneapolis President Neel Kashkari said he expects the US central bank will need to raise interest rates one more time this year.

“With weak but positive growth holding recession at bay on both sides of the Atlantic, central banks will not be able to ease financial conditions between now and the end of the year,” said Nadège Dufossé, global head of multi asset funds at Candriam. “With positive surprises now largely priced in, there seems to be little room for further appreciation in equity markets, suggesting a degree of caution on risky assets.”

Positioning in the Nasdaq 100 is now one-sided net short at $8.1 billion, with all long positions unwound, according to Citigroup Inc. strategists.  

Short Positions Pile Up in Nasdaq Futures, Citi Strategists Say

Jamie Dimon, chairman and chief executive of JPMorgan Chase & Co., floated the idea US interest rates could reach 7%, a worst-case scenario that could catch consumers and businesses off-guard. Meanwhile, a warning that a US government shutdown would reflect poorly on America’s credit rating from Moody’s Investors Service kept traders focused on an end-of-month deadline. 

Data on US consumer confidence and new home sales expected later Tuesday could provide more clues on the outlook for the economy and monetary policy. The Treasury’s auction of two-year notes will also be closely monitored.

Those barometers of risk are “all important but unlikely to stop the end-of-month and quarter push to rebalance and rethink risks – with USD up, rates up, stocks down all still in play,” Bob Savage, head of markets strategy at BNY Mellon, wrote in a note to clients.

In Asia, property concerns continued to weigh on Chinese markets. Hong Kong’s Hang Seng Index fell to levels last seen in November and mainland benchmarks inched lower, reflecting a dismal mood across the region.

A gauge of Chinese property developers slipped further after slumping by the most in nine months on Monday amid fresh signs of turmoil for the sector. China Evergrande Group missed a debt payment and former executives were detained. That added to fears about the sector’s debt pile and compounded concern that global growth will stall as the economic engine of the world’s second biggest economy sputters.

Key events this week:

  • US new home sales, Conference Board consumer confidence, Tuesday
  • ECB’s Philip Lane speaks on monetary policy, Tuesday
  • China industrial profits, Wednesday
  • US durable goods, Wednesday
  • Eurozone economic confidence, consumer confidence, Thursday
  • US initial jobless claims, GDP, Thursday
  • Fed Chair Jerome Powell town hall meeting with educators while Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee make speeches, Thursday
  • Eurozone CPI, Friday
  • Japan unemployment, industrial production, retail sales, Tokyo CPI, Friday
  • US consumer spending, wholesale inventories, University of Michigan consumer sentiment, Friday
  • ECB President Christine Lagarde speaks, Friday
  • New York Fed President John Williams speaks, Friday

Some of the main moves in markets:


  • S&P 500 futures fell 0.4% as of 8:24 a.m. New York time
  • Nasdaq 100 futures fell 0.4%
  • Futures on the Dow Jones Industrial Average fell 0.4%
  • The Stoxx Europe 600 fell 0.5%
  • The MSCI World index fell 0.2%


  • The Bloomberg Dollar Spot Index was little changed
  • The euro rose 0.1% to $1.0605
  • The British pound fell 0.2% to $1.2185
  • The Japanese yen was little changed at 148.82 per dollar


  • Bitcoin was little changed at $26,269.88
  • Ether rose 0.3% to $1,591.4


  • The yield on 10-year Treasuries declined four basis points to 4.49%
  • Germany’s 10-year yield declined two basis points to 2.77%
  • Britain’s 10-year yield declined four basis points to 4.28%


  • West Texas Intermediate crude fell 0.6% to $89.16 a barrel
  • Gold futures fell 0.3% to $1,930.20 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson.

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