US equity futures have recorded a third consecutive day of losses due to increased yields and a stronger dollar. This comes as the possibility of a Trump presidency causing more inflation and leading to less aggressive rate cuts continues to impact markets. At 8:00am ET, S&P and Nasdaq futures were down 0.3% with megacap tech names mostly lower. Global stocks, excluding China, are mostly down. Bond yields are 2bp higher pushing the 10Y as high as 4.24%, the highest since July 26. The USD is surging while the yen plunges as low as 153 as yields on Japan’s 40-year notes reached the highest in 16 years. Commodities are mixed with base metals higher, and oil and precious metals lower.
In premarket trading, Tesla was down 0.6% ahead of earnings this afternoon, while Boeing shares were trading marginally higher after another disastrous quarter. McDonald’s drops 6% after a severe E. coli outbreak tied to the restaurant chain’s Quarter Pounders sickened dozens of people in the US and killed one. Vertiv falls 7% after the electrical power equipment company issued a fourth-quarter sales forecast that trailed Wall Street expectations. Starbucks drops 4% after pulling guidance for 2025 after sales plunged for a third consecutive quarter.
The broader risk-off tone comes as investors pare back bets on rapid policy easing, given signs that the US economy remains robust and concerns about higher inflation as a Republican sweep looks increasingly likely. Most Fed officials speaking earlier this week signaled they favor a slower tempo of rate reductions.
The bond moves have made earnings seem like a “bit of a sideshow,” said James Athey, a portfolio manager at Marlborough. “Shifting growth , the Fed and election expectations have created a bit of a perfect storm for a Treasury market which was a little over its skis in terms of rate cut expectations just a month or so ago.”
The International Monetary Fund, meanwhile, lowered its global growth forecast for next year and warned of accelerating risks ranging from wars to trade protectionism, even as it credited central banks for taming inflation without sending nations into recession.
In Europe, the Stoxx 600 was down 0.2% as losses in consumer products and basic resources are offset by gains in autos and personal care names. Personal care stocks outperform, led by Reckitt Benckiser’s gains after reporting a smaller drop in like-for-like sales than feared. Consumer products are among lagging sectors, weighed down by L’Oreal’s post-earnings rout which tumbled on lower organic sales growth/China challenges. Among individual moves, Deutsche Bank dropped as analysts noted higher-than-expected provisions.
Earlier in the session, Asian stocks hit their lowest level in a month as a weakness in tech heavyweight TSMC and the dollar’s strength offset a rally in Hong Kong shares. The MSCI Asia Pacific Index moved in a narrow range before retreating 0.4%, as TSMC dragged while Meituan and Toyota advanced.
In FX, the dollar also adds to its recent gains with the Bloomberg Dollar Spot Index climbing 0.2%. The yen is the clear underperformer among in the G-10 space, falling more than 1% against the greenback and taking USDJPY to 153 and above the 200 DMA in the process.
In rates, treasuries are cheaper again across the curve, underperforming bunds where German 2-year yields are richer by 7bp on the day. US yields are 1bp-2bp cheaper across maturities, with 10-year around 4.22%, the highest since July and trailing bunds in the sector by 2.5bp; Canadian yields are little changed ahead of the rate decision
In commodities, oil prices decline, with WTI falling 1% to $71 a barrel as a US industry group signaled a rise in nationwide crude inventories, and the Biden administration renewed efforts to secure a cease-fire in the Middle East. Gold was steady after climbing to a fresh record. Gold hit another record high, rising above $2750 as traders seek safety amid jitters over the US election and ongoing conflict in the Middle East.
Looking at today's calendar, we get September existing home sales at 10am and the Fed Beige book at 2pm. Fed speaker slate includes Bowman (9am) and Barkin (12pm)
Bottom Line
The US equity futures market is experiencing a third consecutive day of losses due to increased yields and a stronger dollar. This is largely due to the possibility of a Trump presidency causing more inflation and
US equity futures have recorded a third consecutive day of losses due to increased yields and a stronger dollar. This comes as the possibility of a Trump presidency causing more inflation and leading to less aggressive rate cuts continues to impact markets. At 8:00am ET, S&P and Nasdaq futures were down 0.3% with megacap tech names mostly lower. Global stocks, excluding China, are mostly down. Bond yields are 2bp higher pushing the 10Y as high as 4.24%, the highest since July 26. The USD is surging while the yen plunges as low as 153 as yields on Japan’s 40-year notes reached the highest in 16 years. Commodities are mixed with base metals higher, and oil and precious metals lower.
In premarket trading, Tesla was down 0.6% ahead of earnings this afternoon, while Boeing shares were trading marginally higher after another disastrous quarter. McDonald’s drops 6% after a severe E. coli outbreak tied to the restaurant chain’s Quarter Pounders sickened dozens of people in the US and killed one. Vertiv falls 7% after the electrical power equipment company issued a fourth-quarter sales forecast that trailed Wall Street expectations. Starbucks drops 4% after pulling guidance for 2025 after sales plunged for a third consecutive quarter.
The broader risk-off tone comes as investors pare back bets on rapid policy easing, given signs that the US economy remains robust and concerns about higher inflation as a Republican sweep looks increasingly likely. Most Fed officials speaking earlier this week signaled they favor a slower tempo of rate reductions.
The bond moves have made earnings seem like a “bit of a sideshow,” said James Athey, a portfolio manager at Marlborough. “Shifting growth , the Fed and election expectations have created a bit of a perfect storm for a Treasury market which was a little over its skis in terms of rate cut expectations just a month or so ago.”
The International Monetary Fund, meanwhile, lowered its global growth forecast for next year and warned of accelerating risks ranging from wars to trade protectionism, even as it credited central banks for taming inflation without sending nations into recession.
In Europe, the Stoxx 600 was down 0.2% as losses in consumer products and basic resources are offset by gains in autos and personal care names. Personal care stocks outperform, led by Reckitt Benckiser’s gains after reporting a smaller drop in like-for-like sales than feared. Consumer products are among lagging sectors, weighed down by L’Oreal’s post-earnings rout which tumbled on lower organic sales growth/China challenges. Among individual moves, Deutsche Bank dropped as analysts noted higher-than-expected provisions.
Earlier in the session, Asian stocks hit their lowest level in a month as a weakness in tech heavyweight TSMC and the dollar’s strength offset a rally in Hong Kong shares. The MSCI Asia Pacific Index moved in a narrow range before retreating 0.4%, as TSMC dragged while Meituan and Toyota advanced.
In FX, the dollar also adds to its recent gains with the Bloomberg Dollar Spot Index climbing 0.2%. The yen is the clear underperformer among in the G-10 space, falling more than 1% against the greenback and taking USDJPY to 153 and above the 200 DMA in the process.
In rates, treasuries are cheaper again across the curve, underperforming bunds where German 2-year yields are richer by 7bp on the day. US yields are 1bp-2bp cheaper across maturities, with 10-year around 4.22%, the highest since July and trailing bunds in the sector by 2.5bp; Canadian yields are little changed ahead of the rate decision
In commodities, oil prices decline, with WTI falling 1% to $71 a barrel as a US industry group signaled a rise in nationwide crude inventories, and the Biden administration renewed efforts to secure a cease-fire in the Middle East. Gold was steady after climbing to a fresh record. Gold hit another record high, rising above $2750 as traders seek safety amid jitters over the US election and ongoing conflict in the Middle East.
Looking at today's calendar, we get September existing home sales at 10am and the Fed Beige book at 2pm. Fed speaker slate includes Bowman (9am) and Barkin (12pm)
Bottom Line
The US equity futures market is experiencing a third consecutive day of losses due to increased yields and a stronger dollar. This is largely due to the possibility of a Trump presidency causing more inflation and
