Treasuries Extend Slide On Powell; Stocks Mixed: Markets Wrap

Bonds fell and the dollar rose as Federal Reserve Chair Jerome Powell continued to push back against any hopes of lower interest rates.

US 10-year yields climbed nine basis points to 4.11%, extending moves that started on Friday after a blockbuster jobs report. Yields on debt from Australia to Germany rose. The Bloomberg Dollar Index traded near a two-month high and oil prices retreated.

Meanwhile, global stock markets were mixed. In the US, S&P 500 futures dipped, while European shares edged higher, supported by strong earnings from Italian lender UniCredit SpA.

The “danger of moving too soon is that the job’s not quite done,” Powell said in an interview on CBS’s 60 Minutes on Sunday. The comments add evidence to a view that traders have been over-eager in pricing in interest rate cuts and now need to dial back those expectations. Wall Street banks from Goldman Sachs Group Inc. to Barclays Plc are among those that have pushed back their predictions for the timing of the Fed’s first reduction.

“There’s still a lot of uncertainty as to how quickly they cut,” said James Rossiter, head of global macro strategy at Toronto Dominion Bank. “It’s a quiet week for data, so we’ll be watching central bankers very closely.”

The chance of a quarter-point of easing in March fell to almost 10% after Powell’s comments. Just four weeks ago, a move by then was considered a near certainty by investors.

Investors said they’ll be paying close attention to the lineup of central bank speakers this week for more clues about the direction of monetary policy. Chicago Fed President Austan Goolsbee is scheduled to speak on Bloomberg TV later today, while Cleveland Fed President Loretta Mester and Minneapolis Fed President Neel Kashkari are due to provide remarks on Tuesday.

Corporate Highlights:

• Estee Lauder climbed 19% in premarket trading after announcing plans to cut about 3% to 5% of the workforce in a restructuring program. The beauty company also improved its sales outlook for the fiscal year.
• Caterpillar Inc. batted away concerns of a global economic slowdown, with higher sales in its energy and transportation business in the fourth quarter helping the global machinery maker post profit that topped analysts’ expectations. Shares of Caterpillar rose 3.2% in premarket trading in New York.
• Novo Nordisk A/S rose as much as 2.6% after agreeing to buy three manufacturing plants for $11 billion to help it meet surging demand for obesity drug Wegovy and diabetes shot Ozempic. Novo is buying the fill-finish sites from its main shareholder, Novo Holdings A/S, which on Monday agreed to buy the owner of the assets, Catalent Inc. in a deal with an enterprise value of $16.5 billion.
  

  Key events this week:

  • Australia rate decision, Tuesday
  • Eurozone retail sales, Tuesday
  • Germany factory orders, Tuesday
  • Cleveland Fed President Loretta Mester, Philadelphia Fed President Patrick Harker speak, Tuesday
  • Bank of England Deputy Governor Sarah Breeden speaks, Wednesday
  • Fed Governor Adriana Kugler, Richmond Fed President Tom Barkin speak, Wednesday
  • China PPI, CPI, Thursday
  • Pakistan general election, Thursday
  • ECB Chief Economist Philip Lane, ECB Governing Council member Pierre Wunsch speak, Thursday
  • European Central Bank publishes economic bulletin, Thursday
  • US initial jobless claims, Thursday
  • US Treasury Secretary Janet Yellen speaks at a Senate banking committee hearing, Thursday
  • Australian Reserve Bank Governor Michele Bullock delivers parliamentary testimony, Friday
  • China aggregate financing, money supply, new yuan loans, Friday
  • Germany CPI, Friday

    Some of the main moves in markets:

    Stocks

    • The Stoxx Europe 600 was little changed as of 8:20 a.m. New York time
    • S&P 500 futures fell 0.1%
    • Nasdaq 100 futures were little changed
    • Futures on the Dow Jones Industrial Average fell 0.3%
    • The MSCI Asia Pacific Index fell 0.3%
    • The MSCI Emerging Markets Index fell 0.5%

    Currencies

    • The Bloomberg Dollar Spot Index rose 0.4%
    • The euro fell 0.4% to $1.0746
    • The Japanese yen fell 0.1% to 148.57 per dollar
    • The offshore yuan was little changed at 7.2206 per dollar
    • The British pound fell 0.6% to $1.2554

    Cryptocurrencies

    • Bitcoin rose 1.3% to $43,308.56
    • Ether rose 1.1% to $2,324.67

    Bonds

    • The yield on 10-year Treasuries advanced nine basis points to 4.11%
    • Germany’s 10-year yield advanced six basis points to 2.30%
    • Britain’s 10-year yield advanced eight basis points to 3.99%

    Commodities

    • Brent crude was little changed
    • Spot gold fell 0.9% to $2,021.94 an ounce

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