US Curve Steepens As Traders Bet On Trump Return: Markets Wrap

US stock futures rose and longer-maturity bonds retreated as investors ratcheted up wagers that Donald Trump would win the presidential election after an assassination attempt.

The US 30-year yield rose above the two-year for the first time since January on bets that Trump would pursue a more expansive fiscal policy if he returns to the White House. The dollar rallied against most of its G-10 peers and US stock futures climbed.

“The shooting has seen the market positively re-appraise Trump’s chances of winning — this is why we are seeing the yield curve steepen more in the medium term,” said Stuart Cole, head macro economist at Equiti Capital UK.

Markets are positioning for a Trump return to the presidency that brings more tariffs and increased spending, moves that could spur inflation. According to Cole, that could make the job of the Federal Reserve “a little more difficult,” even as signs mount that the pace of price growth is coming under control.

Traders will get a chance to gauge the appetite for interest-rate cuts later Monday with both Fed Chair Jerome Powell and San Francisco Fed President Mary Daly due to speak. Last week, economic reports bolstered bets for two rate cuts in 2024.

“The inflation and the Fed rate cut story right now are front and center,” said Kenneth Broux, strategist at Societe Generale.

S&P 500 contracts climbed 0.5%, with Apple Inc. rising in premarket trading after Morgan Stanley said the company’s artificial intelligence platform makes it a top pick. Analyst Erik Woodring boosted his price target on the tech giant’s shares to $273, the third-highest among analysts tracked by Bloomberg, saying Apple Intelligence has potential to drive a record number of device upgrades.

Trump’s media firm, Trump Media & Technology Group Corp., soared 67%. The shares of private prison operators and firearm-related companies were also among stocks rallying before the session-proper starts.

The tone was weaker for equities in Europe, where the Stoxx 600 index edged lower. Burberry Group Plc tumbled nearly 17% after replacing its chief executive officer and issuing a profit warning.

In currencies, the Mexican peso fell more than 1% against the dollar, leading losses among emerging-market peers. Bitcoin, meanwhile, jumped the most in almost two months, on speculation the pro-crypto former president’s chances of winning reelection have improved.

New York state factory activity contracted for an eighth straight month in July while a measure of prices received by producers declined to a one-year low.

Key events this week:

• Eurozone industrial production, Monday
• US Empire State Manufacturing, Monday
• Goldman Sachs earnings, Monday
• Jerome Powell is interviewed by David Rubinstein, Monday
• Fed’s Mary Daly speaks, Monday
• Germany ZEW survey expectations, Tuesday
• US retail sales, business inventories, Tuesday
• Morgan Stanley, Bank of America earnings, Tuesday
• Fed’s Adriana Kugler speaks, Tuesday
• Eurozone CPI, Wednesday
• US housing starts, industrial production, Wednesday
• Fed Beige Book, Wednesday
• Fed’s Thomas Barkin speaks, Wednesday
• ECB rate decision, Thursday
• US initial jobless claims, Philadelphia Fed manufacturing, Conference Board LEI, Thursday
• Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak, Thursday
• Fed’s John Williams, Raphael Bostic speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 8:07 a.m. New York time
• Nasdaq 100 futures rose 0.5%
• Futures on the Dow Jones Industrial Average rose 0.5%
• The Stoxx Europe 600 fell 0.4%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was unchanged at $1.0907
• The British pound was little changed at $1.2977
• The Japanese yen fell 0.1% to 158.04 per dollar

Cryptocurrencies

• Bitcoin rose 4.2% to $62,628.6
• Ether rose 4.5% to $3,345.6

Bonds

• The yield on 10-year Treasuries advanced five basis points to 4.24%
• Germany’s 10-year yield was little changed at 2.50%
• Britain’s 10-year yield advanced one basis point to 4.12%

Commodities

• West Texas Intermediate crude fell 0.1% to $82.11 a barrel
• Spot gold rose 0.3% to $2,418.88 an ounce

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