(Bloomberg) – Markets pointed to a rebound from a Wall Street sell-off as traders pinned their hopes on talks in Washington to break the deadlock on debt ceiling hikes. The dollar climbed to its highest level in more than five weeks.
US stock futures rose and Treasuries stabilized as White House and Congressional negotiators continued to try to settle differences.
Fears that leaders in Washington will be unable to avert a historic default before the June 1 deadline are unsettling markets. Yields rose along the US curve on Tuesday, with the 30-year bond rate rising to about 3.9% — the highest since the turmoil that erupted at regional banks in early March.
“That’s why stock markets have faltered for the past few weeks because now you’re not really being paid to make big bets ahead of this event,” said Grace Peters, head of investment strategy at JPMorgan Private Bank, in one Interviewed by Bloomberg TV.
Negotiators are aiming for a framework agreement to be reviewed after President Joe Biden returns from a curtailed trip to Asia. Any breakthrough in talks would give markets a reason to recover, removing one of the main tail risks weighing on sentiment.
“Over the longer term, that would be a drop that we would take if it came to that,” Peters said. “The market ultimately assumes, I think, that the problem will be solved.”
In Notable Premarket Moves, Target Corp. up more than 2% after warning that “weakening sales trends” were likely to hurt near-term results as consumers withdraw discretionary spending. On Tuesday, Home Depot Inc. lowered its outlook.
Tesla Inc. rose after CEO Elon Musk said the electric carmaker would focus on advertising in a major shift.
Read more: Cash is king again as debt ceiling conflict heats up: macro view
Important events this week:
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US housing construction starts on Wednesday
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US Initial Jobless Claims, Conference Board Benchmark Index, Existing Home Sales, Thursday
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Japanese CPI, Friday
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ECB President Christine Lagarde takes part in the panel discussion at the Brazilian Central Bank Conference on Friday
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New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former Chair Ben Bernanke will join the panel on Friday
The story goes on
Some of the key movements in the markets:
Shares
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S&P 500 futures were up 0.2% as of 6:42 a.m. New York time
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Nasdaq 100 futures were little changed
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Futures on the Dow Jones Industrial Average rose 0.3%
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The Stoxx Europe 600 fell 0.1%
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The MSCI World Index fell 0.2%
currencies
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The Bloomberg Dollar Spot Index rose 0.3%
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The euro fell 0.3% to $1.0825
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The British pound fell 0.4% to $1.2440
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The Japanese yen fell 0.4% to 136.99 per dollar
cryptocurrencies
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Bitcoin fell 0.2% to $26,903.62
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Ether fell 0.8% to $1,807.28
Bind
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The 10-year government bond yield was little changed at 3.53%
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The 10-year German government bond yield fell four basis points to 2.31%
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The 10-year UK government bond yield fell three basis points to 3.79%
raw materials
This story was created with the support of Bloomberg Automation.
– With support from Allegra Catelli, Sagarika Jaisinghani and Michael Msika.
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