U.S. futures rose, with investors weighing the impact of volatile commodity prices on inflation and economic growth.
S&P 500 futures signaled equities will climb for a second day. Commodities markets have been upended by the Ukraine crisis as big companies withdraw from Russia, lenders pull back from financing deals and the threat of new sanctions deters buyers. Zinc reached its highest since 2007 and aluminum surged to an all-time high. Treasuries fluctuated.
U.S. Treasuries reached “extreme overbought territory” prior to Wednesday’s rebound in yields, according to JPMorgan Chase & Co. strategists. On a technical basis, the bank’s strategists still view the Treasuries bear market as intact and expect the 10-year yield to exceed 2% in the months ahead.
Jobless claims fell by more than forecast to the lowest level since the start of the year, as Covid-19 cases decline and restrictions ease. The data come ahead of the government’s monthly employment report, which is currently forecast to show the U.S. added 415,000 jobs in February.
Federal Reserve Chair Jerome Powell voiced support on Wednesday for a quarter-point Fed rate hike later this month and indicated the central bank may have to take tougher action if price pressures don’t start to ease. He managed to “appease risk-markets by ruling out a 50 basis-points hike in March, while simultaneously promising inflation vigilance at following meetings,” Citigroup Inc. strategists William O’Donnell and Edward Acton wrote in a note.
“It’s really time for investors to be prepared for more volatility, especially in the bond markets,” as the Fed has yet to commence balance-sheet reduction, Nancy Davis, chief investment officer at Quadratic Capital Management LLC, said on Bloomberg Television.
What to watch this week:
- U.S. unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.8% as of 9:03 a.m. New York time
- Futures on the Nasdaq 100 rose 0.9%
- Futures on the Dow Jones Industrial Average rose 0.7%
- The Stoxx Europe 600 was little changed
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $1.1094
- The British pound fell 0.1% to $1.3392
- The Japanese yen fell 0.1% to 115.64 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.87%
- Germany’s 10-year yield advanced four basis points to 0.06%
- Britain’s 10-year yield advanced seven basis points to 1.33%
Commodities
- West Texas Intermediate crude fell 1.8% to $108.58 a barrel
- Gold futures rose 0.3% to $1,927.20 an ounce
