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U.S. Stock Futures Drop, 10-Year Yield Eyes 3.05%

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(Bloomberg) — U.S. stock futures accelerated losses, the dollar rallied and Treasuries fell after retail sales data added to confidence in the American economy even as signs mount that growth is slowing abroad.

The S&P 500 Index was poised to fall for the first time in five days, snapping a risk-on mood that had propelled equities to the highest since mid-March. Rising speculation the Federal Reserve will raise rates three more times this year pushed Bloomberg’s dollar index to the highest level of 2018 and sent the 10-year note yield above 3.04 percent. Home Depot Inc. retreated after reporting soft sales, though upbeat retail sales data pointed to a rebound in consumer spending this quarter.

Investors grappled with trade, growth, and geopolitical worries as a risk-off mood spread across assets. European equities were mixed but benchmarks fell in South Korea and Australia earlier, and in Hong Kong after data signaled investment slowing in China. Shanghai shares bucked the declines as the same numbers showed economic momentum broadly holding The euro slid following disappointing German growth data.

What began as a sell-off in European bonds on Monday — off the back of hawkish comments from an ECB official — picked up steam through the U.S. session and carried through to Asia. Rising yields, a stronger dollar and sliding stocks are fast becoming a familiar and uncomfortable cocktail for investors. Now violence in the Middle East, the U.S.-China trade spat, uncertainty on Italy’s government and global growth concerns are helping cement the prevailing sentiment.

Despite the sour mood, established safe-haven assets failed to catch a bid. Gold and the yen dropped, and the Swiss franc weakened.

Elsewhere, the Turkish lira hit a new low, plunging after President Recep Tayyip Erdogan said he intends to tighten his grip on the economy and take more responsibility for monetary policy if he wins an election next month. Emerging-market stocks slumped.

Terminal users can read more in our markets live blog.

These are some key events to watch this week:

  • China plans to send Vice Premier Liu He to Washington for more trade talks.
  • European Union Chief Brexit negotiator Michel Barnier briefs European affairs ministers on the status of talks with the U.K.
  • U.K. Prime Minister Theresa May meets with her Brexit cabinet Tuesday to discuss plans for a post-withdrawal customs union.
  • U.S. industrial production numbers are due this week.

These are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index was little changed as of 9:03 a.m. New York time.
  • Futures on the S&P 500 Index declined 0.6 percent, the first retreat in almost two weeks.
  • The MSCI All-Country World Index declined 0.4 percent, the first retreat in a week and the largest drop in almost two weeks.
  • The U.K.’s FTSE 100 Index jumped 0.5 percent to the highest in almost four months.
  • Germany’s DAX Index climbed 0.1 percent.
  • The MSCI Emerging Market Index sank 1.4 percent, the first retreat in more than a week and the biggest tumble in almost seven weeks.
  • The MSCI Asia Pacific Index sank 1 percent, the largest decrease in almost seven weeks.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.5 percent to the highest in almost 20 weeks on the biggest increase in two weeks.
  • The euro declined 0.5 percent to $1.187, the largest fall in a week.
  • The British pound dipped 0.4 percent to $1.3507, the weakest in 19 weeks on the biggest dip in two weeks.
  • The Japanese yen dipped 0.5 percent to 110.18 per dollar, the weakest in 16 weeks.

Bonds

  • The yield on 10-year Treasuries jumped three basis points to 3.04 percent, the highest in about seven years on the biggest surge in more than three weeks.
  • Germany’s 10-year yield increased three basis points to 0.64 percent, the highest in more than two months.
  • Britain’s 10-year yield climbed one basis point to 1.486 percent, the highest in almost three weeks.

Commodities

  • West Texas Intermediate crude gained 1.1 percent to $71.73 a barrel, the highest in more than three years.
  • Copper decreased 0.4 percent to $3.08 a pound.
  • Gold decreased 0.8 percent to $1,303.25 an ounce, the weakest in 19 weeks on the largest dip in two weeks.

–With assistance from Andreea Papuc

To contact the reporters on this story: Samuel Potter in London at spotter33@bloomberg.net, Jeremy Herron in New York at jherron8@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Natasha Doff

©2018 Bloomberg L.P.

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Safdarali Rizvi the management graduate. Has been an avid book reader all his life so naturally loves playing with his words. His curiosity for discovering futuristic opportunities lead him to explore the world of stock world. He has a real passion for calisthenics and sports. His management abilities and hunger for learning bring tremendous value to our team.

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