High Treasury Yields Dampen US Stock Futures
Published: 02:10 PM,Oct 05,2023 | EDITED : 06:10 PM,Oct 05,2023
Oct 5 U.S. stock index futures fell on Thursday as Treasury yields held on to recent highs, while investors awaited more data to gauge the strength of the labor market.
Although longer-dated US Treasury yields eased from 16-year highs on Wednesday, investors remain concerned that the elevated levels may pressure equities.
Worries about U.S. government spending and its ballooning budget deficit have added to uncertainty around the interest rates trajectory, contributing to a steep selloff that have caused a rout in Treasury prices and a spike in yields.
'The rise in long-dated bond yields shows markets are readjusting to the higher-for-longer rate environment,' said Janet Mui, head of market analysis at RBC Brewin Dolphin.
'Markets are moving on to debate how long rates will remain high in the current cycle, as well as rethinking the optimal interest rate level in the long run.' The S&P 500 and the tech-heavy Nasdaq lost around 5per cent and 6per cent last month as yields spiked.
Megacap growth stocks Apple, Tesla, Amazon.com and Alphabet fell between 0.1per cent and 0.2per centper cent in premarket trading on Thursday.
Following a mixed jobs reports earlier this week, focus will be on the more comprehensive September non-farm payrolls data on Friday. Weekly jobless claims are also due later on Thursday.
Traders put the chance of interest rates remaining unchanged in November and December at 80per cent and 63per cent, respectively, according to CME's FedWatch tool.
At 7:20 a.m. ET, Dow e-minis were down 92 points, or 0.28per cent, S&P 500 e-minis were down 10.5 points, or 0.24per cent, and Nasdaq 100 e-minis were down 27.75 points, or 0.19per cent.
Federal Reserve policymakers including Cleveland's Loretta Mester, Minneapolis' Neel Kashkari, Richmond's Thomas Barkin, San Francisco's Mary Daly and Vice Chair for Supervision Michael Barr are set to speak during the day.
Meanwhile, the race to replace ousted House Speaker Kevin McCarthy took shape on Wednesday as Steve Scalise, the chamber's No. 2 Republican, and Jim Jordan, a leading antagonist of Democratic President Joe Biden, said they would seek the post.
Among stocks, Clorox fell 4.2per cent as the cleaning products maker said it expects to post a first-quarter loss.
Rivian Automotive dipped 9per cent after the EV-maker said it plans to sell convertible green bonds worth $1.5 billion and forecast quarterly revenue to rise in line with estimates.
VinFast gained 6.7per cent after the Vietnamese EV maker reported third-quarter revenue that more than doubled.
U.S. energy firms including Chevron, Exxon Mobil, Marathon Oil and Occidental Petroleum fell between 0.5per cent and 2.0per cent as crude prices remained under pressure on an uncertain demand outlook._Reuters.
Although longer-dated US Treasury yields eased from 16-year highs on Wednesday, investors remain concerned that the elevated levels may pressure equities.
Worries about U.S. government spending and its ballooning budget deficit have added to uncertainty around the interest rates trajectory, contributing to a steep selloff that have caused a rout in Treasury prices and a spike in yields.
'The rise in long-dated bond yields shows markets are readjusting to the higher-for-longer rate environment,' said Janet Mui, head of market analysis at RBC Brewin Dolphin.
'Markets are moving on to debate how long rates will remain high in the current cycle, as well as rethinking the optimal interest rate level in the long run.' The S&P 500 and the tech-heavy Nasdaq lost around 5per cent and 6per cent last month as yields spiked.
Megacap growth stocks Apple, Tesla, Amazon.com and Alphabet fell between 0.1per cent and 0.2per centper cent in premarket trading on Thursday.
Following a mixed jobs reports earlier this week, focus will be on the more comprehensive September non-farm payrolls data on Friday. Weekly jobless claims are also due later on Thursday.
Traders put the chance of interest rates remaining unchanged in November and December at 80per cent and 63per cent, respectively, according to CME's FedWatch tool.
At 7:20 a.m. ET, Dow e-minis were down 92 points, or 0.28per cent, S&P 500 e-minis were down 10.5 points, or 0.24per cent, and Nasdaq 100 e-minis were down 27.75 points, or 0.19per cent.
Federal Reserve policymakers including Cleveland's Loretta Mester, Minneapolis' Neel Kashkari, Richmond's Thomas Barkin, San Francisco's Mary Daly and Vice Chair for Supervision Michael Barr are set to speak during the day.
Meanwhile, the race to replace ousted House Speaker Kevin McCarthy took shape on Wednesday as Steve Scalise, the chamber's No. 2 Republican, and Jim Jordan, a leading antagonist of Democratic President Joe Biden, said they would seek the post.
Among stocks, Clorox fell 4.2per cent as the cleaning products maker said it expects to post a first-quarter loss.
Rivian Automotive dipped 9per cent after the EV-maker said it plans to sell convertible green bonds worth $1.5 billion and forecast quarterly revenue to rise in line with estimates.
VinFast gained 6.7per cent after the Vietnamese EV maker reported third-quarter revenue that more than doubled.
U.S. energy firms including Chevron, Exxon Mobil, Marathon Oil and Occidental Petroleum fell between 0.5per cent and 2.0per cent as crude prices remained under pressure on an uncertain demand outlook._Reuters.