US Futures Steady, Two-Year Treasury Yield Climbs: Markets Wrap

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(Bloomberg) — Short-end Treasury yields rose for second day and U.S. equity futures held steady as concerns over the U.S. banking sector eased, while rising inflation supported bets for further Federal Reserve rate hikes.

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The two-year Treasury yield – the most sensitive to policy moves – rose 11 basis points to 4.36%, adding to Tuesday’s 27 basis points rise, while the 10-year rate was little changed at 3.69%. Contracts on the S&P 500 and the Nasdaq 100 fluctuated between small gains and losses. gauge of the dollar’s strength edged higher after four days of losses.

pricing positions the Fed to hike rates by quarter percentage point next week after Monday’s chances of a hike are about 50-50. The closely watched core consumer price index rose 0.5% in February, slightly ahead of the median estimate of 0.4% and enough to keep the pressure on policy makers.

“Our view is that inflation has peaked and the Fed will do another 25 basis points hike and that’s it,” Mark Matthews, Asia research head at bank Julius Baer & Co, said on Bloomberg TV.

Europe’s Stoxx 500 equity benchmark slipped nearly 0.4%, with energy companies among the biggest losers this week after sharp drop in oil prices. Bonds fell across Europe, with the German two-year yield rising 12 basis points to 3%

Traders were also digesting slew of economic data from China, where retail sales rose as expected while factory output was lower than anticipated. The People’s Bank of China added more liquidity than expected while keeping the key lending rate unchanged. Rising housing sales provided a clearly positive signal, reflected in a rally in the mainland property index.

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Financial conditions in Tokyo and Hong Kong were among the biggest gainers on Wednesday, with the Hang Seng index rising more than 1%. US stocks edged higher at Tuesday’s close, helping set the scene for change in sentiment in Asia.

Comments from ratings companies on the financial sector underscored that sentiment is likely to remain fragile following the biggest US bank failure since the financial crisis.

Moody’s Investors Service cut its outlook for the sector following trio of banking collapses in the past few days. First Republic Bank posted a volatile stop after S&P Global Ratings placed the company on negative watch.

Elsewhere in the markets, oil climbed from its lowest level in three months as traders took stock of the demand outlook. Gold declined, taking some of the shine off its three-day rally of over 5%.

Major events of the week:

  • Eurozone Industrial Production, Wednesday

  • US Business Index, Retail Sales, PPI, Empire Building, Wednesday

  • Eurozone Rate Decision, Thursday

  • US housing starts, initial jobless claims, Thursday

  • Janet Yellen appears before the Senate Finance Committee on Thursday

  • US University of Michigan Consumer Sentiment, Industrial Production, Conference Board Leading Index, Friday

Some key moves in the markets:


  • The Stoxx Europe 600 fell 0.5% as of 8:08 .m. London time

  • S&P 500 futures fell 0.1%

  • Nasdaq 100 futures were little changed

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • MSCI Asia Pacific index rose 0.6%

  • MSCI Emerging Markets Index rose 0.8%


  • Bloomberg Dollar Spot Index up 0.2%

  • The euro was unchanged at $1.0733

  • The Japanese yen fell 0.5% to 134.94 per dollar

  • The offshore yuan fell 0.2% to 6.8966 per dollar

  • The British pound was little changed at $1.2150

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  • Bitcoin rose 1.3% to $24,960.28

  • Ether rose 0.2% to $1,708.7


  • The yield on 10-year Treasuries was little changed at 3.69%

  • Germany’s 10-year yield rose eight basis points to 2.50%

  • UK 10-year yield rose six basis points to 3.55%


  • Brent crude rose 1.3% to $78.47 barrel

  • Spot gold fell 0.7% to $1,890.42 an ounce

This story was produced with assistance from Bloomberg Automation.

With the assistance of Tasia Sipahutar.

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