Yields Gain as Traders Absorb Biden Spending Plan: Markets Wrap

(Bloomberg) -- Treasury yields rose with commodities before U.S. President Joe Biden unveils an economic plan including a $2.25 trillion infrastructure boost. Stocks were mixed as traders weighed inflation and the tax impact of the stimulus.

S&P 500 index futures were little changed, while Nasdaq 100 contracts and European stocks rose after Asia’s equity benchmark posted a second-day decline. The dollar dropped, still heading for its best quarter in a year. The Bloomberg Commodity Index and emerging-market currencies led by South Africa’s rand climbed.

Investors, rattled by the meltdown at Bill Hwang’s Archegos Capital Management, are turning their attention to growth and inflation as volatility spurred by the forced sales subsides. While Europe’s struggle with inoculations and the resurgence of the coronavirus have tempered growth expectations, the U.S. vaccine rollout is surpassing targets.

“Even if President Biden’s infrastructure plans come with a considerable sting in the tail, the economic reflation and reopening story should limit any pullback in interest rates,” ING Groep NV strategists including Antoine Bouvet and Padhraic Garvey wrote in a note. “The rise in rates is about more than fiscal stimulus.”

Ten-year Treasury yields rose for the fourth time in five days, trading near a 14-month high. Gold steadied after a two-day slump but remained below 1,700 per troy ounce. West Texas Intermediate crude slipped before the April 1 meeting of OPEC and its allies.

Nasdaq futures expiring in June rose 0.4%, and Apple Inc. posted gains in premarket New York trading, signaling that technology stocks may recover from a two-day selloff.

Stocks at the center of the Archegos crisis also rallied as fallout from the fund’s liquidation appeared to be contained. American depositary receipts of Chinese companies and U.S. media firms including ViacomCBS Inc. and Discovery Inc. advanced.

A gauge of China’s manufacturing industry picked up in March, suggesting the domestic recovery is gathering pace as economic activity returns to normal and demand strengthens.

Some key events to watch this week:

• President Biden is expected to unveil his infrastructure program Wednesday.
• EIA crude inventory report Wednesday.
• OPEC+ meets to discuss production levels for May on Thursday.
• China Caixin PMI due Thursday.
• U.S. employment report for March on Friday.
• Good Friday starts the Easter weekend in countries including the U.S., U.K., France, Germany, Australia and Canada.

These are some of the main moves in financial markets:

Stocks

• Futures on the S&P 500 Index were little changed at 11:19 a.m. London time.
• The Stoxx Europe 600 Index increased 0.2%.
• The MSCI Asia Pacific Index fell 0.7%.
• The MSCI Emerging Market Index declined 0.3%.

Currencies

• The Bloomberg Dollar Spot Index dipped 0.1%.
• The euro climbed 0.1% to $1.1726.
• The British pound gained 0.3% to $1.3775.
• The onshore yuan strengthened 0.3% to 6.554 per dollar.
• The Japanese yen weakened 0.3% to 110.65 per dollar.

Bonds

• The yield on 10-year Treasuries jumped three basis points to 1.73%.
• The yield on two-year Treasuries climbed less than one basis point to 0.15%.
• Germany’s 10-year yield gained one basis point to -0.28%.
• Britain’s 10-year yield advanced two basis points to 0.839%.
• Japan’s 10-year yield increased less than one basis point to 0.095%.

Commodities

• West Texas Intermediate crude declined 0.5% to $60.22 a barrel.
• Brent crude declined 0.6% to $63.77 a barrel.
• Gold strengthened 0.1% to $1,686.42 an ounce.

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