Treasury Yields, U.S. Futures Fall as Data Awaited: Markets Wrap

(Bloomberg) -- U.S. Treasuries rose as traders tempered their expectations for monetary-policy tightening after New Zealand’s measured approach to rate hikes. Markets awaited cues from upcoming data including growth in the world’s largest economy.

Signals from the stock market were muted, with the European benchmark erasing a modest gain while U.S. index futures edged lower. The two-year U.S. yield shed two basis points. The dollar extended its rising streak against a basket of peers to a fourth day.

Nordstrom Inc. sank 27% in New York premarket trading after results missed estimates. Telecom Italia SpA surged in Europe on enhanced takeover interest. Oil prices fluctuated as producers and major consuming nations headed for a confrontation.

Investors are on the edge as they face a wall of worry from a resurgence of Covid-19 in Europe to signs of persistent consumer-price growth. Damping inflation is now center-stage for policy makers, with ultra-loose, pandemic-era stimulus set to be wound down. The slew of U.S. data as well as Federal Reserve minutes due today may provide the next catalysts for market moves.

One key topic for the minutes would be “discussions around the criteria for a quicker taper of asset purchases,” Carol Kong, a strategist at Commonwealth Bank of Australia, wrote in a note. Inflation trends suggest the Fed needs to start tightening sooner that presently signaled, Kong added.

New Zealand’s currency weakened after the nation raised interest rates to 0.75% to curb price pressures, a smaller move than some had expected. The central bank projected 2% benchmark borrowing costs by the end of 2022. 

Oil futures in New York swung between gains and losses following an announcement by the U.S. and other nations of a coordinated release of strategic reserves. Focus now turns to OPEC+ on how the group will respond to the moves. The alliance has already said that such releases were unjustified by market conditions and it may reconsider plans to add more supply at a meeting next week.

Nordstrom plunged. The company reported higher labor and fulfillment costs in the third quarter while sales remained stubbornly below pre-pandemic levels and profit missed analyst estimates.

Telecom Italia climbed more than 10% after a report that KKR & Co. may increase its offer for the Italian company. Genus Plc tumbled 15% after lowering guidance.

Elsewhere, Turkey’s lira stabilized after Tuesday’s plunge. MSCI’s gauge of emerging-market stocks edged lower for a sixth session.  

For more market analysis, read our MLIV blog.

Here are some key events this week:

• U.S. FOMC minutes, consumer income, wholesale inventories, new home sales, GDP, initial jobless claims, U.S. durable goods, University of Michigan consumer sentiment. All Wednesday
• Bank of Korea policy decision Thursday
• U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday
• Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 fell 0.3% as of 5:48 a.m. New York time
• Futures on the Nasdaq 100 fell 0.4%
• Futures on the Dow Jones Industrial Average fell 0.4%
• The Stoxx Europe 600 was little changed
• The MSCI World index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.3% to $1.1213
• The British pound was little changed at $1.3365
• The Japanese yen was little changed at 115.07 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.65%
• Germany’s 10-year yield declined one basis point to -0.23%
• Britain’s 10-year yield was little changed at 1.00%

Commodities

• West Texas Intermediate crude fell 0.2% to $78.36 a barrel
• Gold futures rose 0.3% to $1,792 an ounce

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