Treasuries and U.S. stock futures mirror rising debt: Markets recap

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(Bloomberg) – Treasuries and U.S. stock futures reflected hopes that Congress would pass a debt deal to avert a default as the White House and Republican leaders in Congress stepped up lobbying for debt. the agreement.

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Treasuries maturing in June rallied as trading resumed on Tuesday after U.S. markets closed for Memorial Day. More broadly, Treasury yields have fallen across the five- to 30-year debt curve.

The dollar, which benefited from the angst around the statutory borrowing limit, was little changed, with the greenback index comfortably below the two-month high set last week.

Contracts on the S&P 500 and Nasdaq 100 rose 0.2% and 0.4%, respectively, after each made similarly weak gains on Monday in thinned holiday trading.

Stocks in Japan fell, Australia’s benchmark was little changed and stocks in South Korea rose. Samsung Electronics Co. and SK Hynix Inc. hit their highest levels in more than a year after Morgan Stanley raised price targets for Korean chipmakers, with SK Hynix its top pick as a key beneficiary of Nvidia Corp’s Artificial Intelligence Opportunity

Contracts for Hong Kong suggest further declines. A key indicator for Chinese stocks is a hair’s breadth away from a bear market as a shaky economic recovery, heightened geopolitical tensions and a weaker yuan kept investors on the sidelines.

A rebound in China’s equity benchmarks would require monetary catalyst or improved ties between Beijing and Washington, in addition to more upbeat macro data, said Hebe Chen, market analyst for IG. “It’s probably safe to say that this reopening has lost steam,” she said.

Environmentalists, defense hawks and conservative hardliners have condemned the concessions made by President Joe Biden and Republican House Speaker Kevin McCarthy to reach a debt ceiling deal. Biden personally called on lawmakers to support the bill, which is slated for a House vote on Wednesday.

For Federal Reserve policymakers, the details of the deal will be another consideration when they meet in June.

“We believe this deal cements a 25 basis point hike at the June 13-14 FOMC meeting. With banking sector stress easing, a potential default was really the only thing that could have prevented a hike. next month,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., in a note. of price, as they should have been a long time ago.”

In commodities, oil rose and gold remained near its lowest level since mid-March as demand for safe-haven assets waned following the US debt deal.

Key events this week:

  • Eurozone Economic Confidence, Consumer Confidence, Tuesday

  • US consumer confidence, Tuesday

  • Richmond Fed Chairman Thomas Barkin interviewed by NABE as part of a series of monetary policy webinars on Tuesday

  • China Manufacturing PMI, Non-Manufacturing PMI, Wednesday

  • U.S. job openings, Wednesday

  • Fed releases Beige Book economic survey on Wednesday

  • Philadelphia Fed Chairman Patrick Harker has a fireside chat on global macroeconomics and monetary conditions on Wednesday

  • Boston Fed Chair Susan Collins and Fed Governor Michelle Bowman speak in Boston on Wednesday.

  • ECB publishes Financial Stability Review on Wednesday

  • Caixin China manufacturing PMI, Thursday

  • Eurozone HCOB Eurozone manufacturing PMI, CPI, unemployment, Thursday

  • U.S. Construction Spending, Initial Jobless Claims, Manufacturing ISM, Light Vehicle Sales, Thursday

  • The ECB publishes a report on its monetary policy meeting on May 3 and 4. ECB President Christine Lagarde speaks at a conference on German savings banks on Thursday

  • Philadelphia Fed President Patrick Harker speaks on the economic outlook during the NABE webinar on Thursday

  • U.S. unemployment, nonfarm payrolls, Friday

Some of the major movements in the markets:

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  • S&P 500 futures rose 0.2% at 9:43 a.m. Tokyo time. The S&P 500 rose 1.3% on Friday

  • Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 2.6%

  • Japan’s Topix index fell 0.7%

  • Australia’s S&P/ASX 200 index was little changed

  • Hong Kong Hang Seng futures fell 0.9%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0717

  • The Japanese yen rose 0.1% to 140.27 per dollar

  • The offshore yuan was little changed at 7.0861 to the dollar

  • The Aussie dollar was little changed at $0.6536

Cryptocurrencies

  • Bitcoin was little changed at $27,676.59

  • Ether fell 0.3% to $1,887.07

Obligations

  • The yield on 10-year Treasury bills fell four basis points to 3.76%

  • Japan’s 10-year yield was little changed at 0.430%

  • Australia’s 10-year yield fell five basis points to 3.65%

Goods

This story was produced with assistance from Bloomberg Automation.

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