(Bloomberg) – US stock futures fell while Treasuries were little changed as financial markets continued to stabilize amid the financial sector turmoil.
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Contracts on the S&P 500 slipped, suggesting the underlying gauge could gain a three-day lead. The benchmark for American equities has remained virtually unchanged in the three weeks since the banking crisis began. The two-year Treasury yield held just under 4% after a roller coaster month in which it rose as high as 5%. A dollar gauge fell for the eighth time in nine days.
Investors will be treated to a wealth of data on the US economy this week, including the central bank’s preferred measure of inflation, along with testimonies from Federal Reserve officials before Congress related to the collapse of regional banks. First Republic Bank climbed in premarket trading and will extend Monday’s advance. alibaba group holding ltd Gained more than 7% as the e-commerce company plans to split into six entities that will individually raise capital and explore IPOs.
In Europe, shares fell as French prosecutors said banks including Societe Generale SA and BNP Paribas SA face collective fines of more than 1 billion euros ($1.1 billion) in an investigation into tax fraud and money laundering.
Swap traders have priced in a more than 50% chance that the Fed will hike rates by a quarter point at its next meeting. They continue to expect significant easing thereafter, with pricing suggesting the key rate will fall to around 4.3% in December, down from around 4.95% in May.
“The market is right to be pricing in a Fed pause,” said Hugh Gimber, global markets strategist at JPMorgan Asset Management, in an interview with Bloomberg TV. “The question here is how big is the effect of worsening lending standards to really bring inflation down towards the target, and I’m not so convinced we’ll see that very quickly. I think we would need a pretty significant economic shock to get there in 2H. Rate cuts are more of a 2024 story.”
The story goes on
Strategists at BlackRock Investment Institute expect the Fed to hike rates further and say markets are wrong to expect rate cuts to be imminent as the economy heads into recession.
Elsewhere, oil extended its biggest rally of the year as a clash between Iraq and its Kurdish region curtailed exports. Gold was higher and Bitcoin traded around $27,000.
Important events this week:
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US conf. Consumer Confidence Board, Tuesday
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EIA Crude Oil Inventory Report, Wednesday
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Eurozone Economic Confidence, Consumer Confidence, Thursday
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US GDP, Initial Jobless Claims, Thursday
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Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin will speak at the event. Treasury Secretary Janet Yellen will also speak on Thursday
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China PMI, Friday
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Eurozone CPI, Unemployment, Friday
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US Consumer Income, PCE Deflator, University of Michigan Consumer Sentiment, Friday
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ECB President Christine Lagarde speaks on Friday
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New York Fed President John Williams speaks on Friday
Some of the key movements in the markets:
Shares
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S&P 500 futures were down 0.2% as of 9:03 a.m. ET
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Nasdaq 100 futures down 0.1%
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Futures on the Dow Jones Industrial Average were little changed
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The Stoxx Europe 600 fell 0.2%
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MSCI World Index up 0.2%
currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.4% to $1.0836
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The British pound rose 0.2% to $1.2309
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The Japanese yen rose 0.6% to 130.79 per dollar
cryptocurrencies
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Bitcoin fell 0.2% to $26,982.04
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Ether was up 1.7% to $1,737.83
Bind
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The 10-year government bond yield rose two basis points to 3.54%
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The 10-year German government bond yield rose five basis points to 2.28%
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The 10-year UK government bond yield rose 8 basis points to 3.44%
raw materials
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West Texas Intermediate crude was up 0.2% to $72.92 a barrel
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Gold futures rose 0.5% to $1,980.90 an ounce
This story was created with the support of Bloomberg Automation.
–Assisted by Jason Scott, Tassia Sipahutar and Allegra Catelli.
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