Stocks, bonds weigh Fed and election risks: Markets wrap

(Bloomberg) — Treasuries were flat after a sell-off on Monday, while stock futures edged lower as traders speculated on the path of U.S. interest rates.

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US futures retreated 0.2%, with the S&P 500 set for its first back-to-back decline in six weeks. Europe’s Stoxx 600 posted little moves. The yield on 10-year Treasuries added one basis point to 4.21% after yesterday’s 11 basis point rise. The dollar changed little.

Bonds fell on Monday as investors scaled back expectations for Fed interest rate cuts after central bank officials signaled a willingness to cut rates at a slower pace. Additionally, traders are weighing the inflationary impact of a potential Donald Trump presidential victory, with his promised tax cuts and trade tariffs ultimately leading to faster price growth and higher rates.

“It’s very clearly tied to a Republican victory on trade — and therefore an agenda that’s more pro-inflationary than the Democrats. We’re in the market betting on Trump,” said Christopher Dembig, senior investment adviser at Pictet Asset Management. “Yield rises are starting to threaten equity markets.” “

Bonds sold off across the board as traders reconsidered the Fed’s path

Gold rose as traders focused on geopolitical risks, including conflicts in the Middle East and the US election – nearing record levels on Monday. Oil fell after rising nearly 2% on Monday.

Pictet’s Dembik noted that the pressure on stocks from the bond market comes with Europe in the midst of a falling earnings season. So far, about 47% of MSCI Europe companies have reported lower-than-expected results, according to data compiled by Bloomberg Intelligence.

Company Highlights:

• Germany’s SAP rose as much as 5.6% in the third quarter after delivering a bump in several key metrics and raising some elements of its guidance for the full year.

• Shares of Hyundai Motor India Ltd fell on Tuesday in Mumbai after the company raised $3.3 billion in the country’s largest initial public offering. Tokyo Metro Co. and Horizon Robotics Inc. IPOs were met with strong demand.

Highlights of this week:

• The ECB’s Christine Lagarde was interviewed by Bloomberg TV on Tuesday

• The BOE’s Andrew Bailey and the ECB’s Klaus Knott and Robert Holzmann are scheduled to speak at the Bloomberg Global Regulatory Forum in New York on Tuesday.

• Philadelphia Fed President Patrick Harker speaks on Tuesday

• Canada rate decision, Wednesday

• Eurozone consumer confidence, Wednesday

• US existing home sales, Wednesday

• Boeing, Tesla, Deutsche Bank Earnings, Wed

• Fed’s Beige Book, Wednesday

• US New Home Sales, Jobless Claims, S&P Global Manufacturing and Services PMI, Thursday

• UPS, Barclays earnings, Thursday

• The Fed’s Beth Hammock speaks Thursday

• American Durable Goods, University of Michigan Consumer Sentiment, Friday

The story continues

Some key movements in the markets:

Shares

• The Stoxx Europe 600 was down 0.1% as of 8:50 a.m. London time.

• S&P 500 futures fell 0.2%

• Nasdaq 100 futures fell 0.3%

• Futures for the Dow Jones industrial average fell 0.2%

• The MSCI Asia Pacific index fell 1%

• The MSCI emerging market index fell 0.4%

Coins

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.2% to $1.0834

• The Japanese yen was little changed at 150.97 per dollar

• The maritime yuan was little changed at 7.1334 per dollar

• The British pound was up 0.2% at $1.3007

Cryptocurrencies

• Bitcoin fell 0.3% to $67,493.66

• Ether fell 0.9% to $2,651.08

Bonds

• The yield on 10-year Treasuries edged up a basis point to 4.21%.

• Germany’s 10-year yield rose four basis points to 2.32%

• Britain’s 10-year yield rose four basis points to 4.17%

materials

• Brent crude fell 0.8% to $73.73 a barrel

• Spot gold rose 0.5% to $2,734.17 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Jason Scott, Winnie Hsu, Abhishek Vishnoi and Aya Wakatsuma.

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