US equity futures advanced and Treasuries fell after US lawmakers reached a deal over the weekend to avoid a government shutdown.
(Bloomberg) — US equity futures advanced and Treasuries fell after US lawmakers reached a deal over the weekend to avoid a government shutdown.
S&P 500 futures added 0.4% after compromise legislation passed on Saturday to keep the government running. Treasury 10-year yields rose five basis points to 4.61%, the highest since 2007.
Investors were also waiting for comments from Federal Reserve chief Jerome Powell, who is due to speak at a roundtable discussion alongside Philadelphia Fed President Patrick Harker. Their views will be of particular interest after New York Fed boss John Williams suggested Friday interest rates should stay high for some time.
The US government funding deal may spur markets to bring forward bets of a November rate hike, some traders said. Swaps are pricing just under a one-in-three chance of a November move, according to data compiled by Bloomberg.
“Financial markets were bracing for a shutdown, so there’s an element of relief, but it’s only a temporary lifting of one of the clouds hanging over the markets now,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management. “Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks.”
Read More: Traders Win Reprieve After ‘Political Circus’ of Shutdown Fight
Meanwhile, in Europe, benchmark indexes retreated, weighed down by losses in drugmaker stocks. Asset manager Mandatum debuted on Helsinki’s stock market, the biggest listing in five years.
In US premarket trading, tech stocks led gains, with strategists at Goldman Sachs Group Inc predicting the sector to do well, benefiting from lower valuations after the recent selloff and a pullback in bond yields.
Meanwhile, the dollar edged higher versus its Group-of-10 peers, after enjoying its best quarter in a year. Against the yen, it briefly touched a year-to-date high of 149.82, after the Bank of Japan said it would conduct an additional buying operation.
Key events this week:
- China has week-long holiday
- Bank of England policy maker Catherine Mann speaks on monetary policy, Monday
- Fed Chair Jerome Powell and Philadelphia Fed President Patrick Harker participate in a roundtable discussion, Monday
- New York Fed President John Williams moderates discussion on climate risk, Monday
- Cleveland Fed President Loretta Mester speaks on economic outlook, Monday
- US ISM manufacturing index, Monday
- Australia rate decision, Tuesday
- Atlanta Fed President Raphael Bostic speaks on economic outlook and inflation, Tuesday
- August US JOLTS report, Tuesday
- Eurozone services and composite PMIs, Wednesday
- ECB President Christine Lagarde gives welcome address at conference, Wednesday
- US ISM services index, Wednesday
- France industrial production, Thursday
- BOE Deputy Governor Ben Broadbent, Riksbank First Deputy Governor Anna Breman participate at panel discussion, Thursday
- San Francisco Fed President Mary Daly speaks at the Economic Club of New York, Thursday
- Germany factory orders, Friday
- September US nonfarm payrolls, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.2% as of 5:33 a.m. New York time
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 fell 0.3%
- The MSCI World index fell 0.2%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.3% to $1.0543
- The British pound fell 0.2% to $1.2176
- The Japanese yen fell 0.2% to 149.72 per dollar
- Bitcoin rose 4.4% to $28,317.19
- Ether rose 3.6% to $1,734.7
- The yield on 10-year Treasuries advanced five basis points to 4.62%
- Germany’s 10-year yield advanced four basis points to 2.87%
- Britain’s 10-year yield advanced six basis points to 4.49%
- West Texas Intermediate crude rose 0.5% to $91.20 a barrel
- Gold futures fell 0.7% to $1,851 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess and Joanna Ossinger.
More stories like this are available on bloomberg.com
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