(Bloomberg) – Treasury bonds and US stock futures reflected hopes that Congress will pass a debt deal to avert a default, as the White House and Republican congressional leaders ramped up lobbying in support of the deal.
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Treasury bonds maturing in June rallied as trading resumed on Tuesday after US markets were closed for Memorial Day. More broadly, government bond yields fell across the curve for five- to 30-year debt.
The dollar, which benefited from legal credit limit worries, was little changed, with the greenback index well 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 posting similarly modest gains on Monday in holiday-sparse trading.
Stocks in Japan fell, Australia’s benchmark was little changed and stocks in South Korea rose. Samsung Electronics Co. and SK Hynix Inc. rose to their highest levels in more than a year after Morgan Stanley raised price targets for the Korean chipmakers, with SK Hynix as the main beneficiary of Nvidia Corp.’s AI opportunities. was the first choice.
Hong Kong contracts point to further declines. A key indicator of Chinese stocks is poised for a bear market as a faltering economic recovery, rising geopolitical tensions and a weaker yuan deterred investors.
A rebound in Chinese stock benchmarks would require a monetary catalyst or an improvement in Beijing-Washington ties in addition to rosier macro data, said Hebe Chen, a market analyst at IG. “It’s safe to say that this reopening has lost momentum,” she said.
Environmentalists, defense activists and conservative hardliners have condemned the concessions made by President Joe Biden and Republican House Speaker Kevin McCarthy in reaching an agreement on the debt ceiling. Biden has personally urged lawmakers to support the bill, which is scheduled for a vote in the House of Representatives on Wednesday.
The details of the deal will be another consideration for Federal Reserve policymakers at their June meeting.
“We believe this deal solidifies a 25 basis point raise at the June 13-14 FOMC meeting. “As tensions in the banking sector ease, a potential default was really the only thing that could have prevented a rate hike next month,” Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., wrote in a note. “More importantly, year-end rate cuts are now fully priced out, as they should have been a long time ago.”
In commodities, oil prices rose and gold prices remained near their lowest levels since mid-March as demand for safe haven assets eased following the US debt deal.
Important events this week:
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Eurozone Economic Confidence, Consumer Confidence, Tuesday
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US consumer confidence, Tuesday
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Richmond Fed President Thomas Barkin was interviewed by NABE on Tuesday as part of its monetary policy webinar series
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China manufacturing PMI, non-manufacturing PMI, Wednesday
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Vacancies in the US, Wednesday
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The Fed releases an economic survey in the Beige Book on Wednesday
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Philadelphia Fed President Patrick Harker hosts a fireside chat Wednesday on global macroeconomics and monetary conditions
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Boston Fed President Susan Collins and Fed Governor Michelle Bowman speak in Boston on Wednesday.
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ECB releases Financial Stability Report on Wednesday
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China Caixin Manufacturing PMI, Thursday
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Eurozone HCOB Eurozone Manufacturing PMI, CPI, Unemployment, Thursday
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US Construction Spending, Initial Jobless Claims, ISM Manufacturing, Light Vehicle Sales, Thursday
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ECB Spending reports on its May 3-4 monetary policy meeting. ECB President Christine Lagarde speaks at the German Savings Banks Conference on Thursday
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Philadelphia Fed President Patrick Harker addresses the economic outlook at NABE’s webinar on Thursday
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US Unemployment, Nonfarm Payrolls, Friday
Some of the key movements in the markets:
Shares
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S&P 500 futures were up 0.2% as of 9:43 a.m. Tokyo time. The S&P 500 rose 1.3% on Friday
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Nasdaq 100 futures were up 0.4%. The Nasdaq 100 rose 2.6%
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Japan’s Topix index fell 0.7%
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Australia’s S&P/ASX 200 index is little changed
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Hong Kong’s Hang Seng futures fell 0.9%
currencies
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The Bloomberg Dollar Spot Index is little changed
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The euro was little changed at $1.0717
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The Japanese yen rose 0.1% to 140.27 per dollar
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The offshore yuan was little changed at 7.0861 per dollar
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The Australian dollar was little changed at $0.6536
cryptocurrencies
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Bitcoin remained little changed at $27,676.59
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Ether fell 0.3% to $1,887.07
Bind
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The 10-year government bond yield fell four basis points to 3.76%
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Japan’s 10-year yield was little changed at 0.430%
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Australia’s 10-year yield fell five basis points to 3.65%
raw materials
This story was created with the support of Bloomberg Automation.
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