U.S. stock futures rallied off session lows after Treasurys recovered from a sharp sell-off that took yields to fresh 16-year highs.
How are stock-index futures trading
-
S&P 500 futures
ES00,
+0.04%
dipped 2 points, or 0%, to 4263 -
Dow Jones Industrial Average futures
YM00,
+0.10%
added 28 points, or 0.1%, to 33229 -
Nasdaq 100 futures
NQ00,
-0.07%
eased 15 points, or 0.1%, to 14699
On Tuesday, the Dow Jones Industrial Average
DJIA
fell 431 points, or 1.29%, to 33002, the S&P 500
SPX
declined 59 points, or 1.37%, to 4229, and the Nasdaq Composite
COMP
dropped 248 points, or 1.87%, to 13059.
What’s driving markets
Equity-index futures matched the volatility in bonds early Wednesday, as markets continued to be led by moves in Treasurys.
A spike in Treasury yields around the European open — which some analysts partly attributed to anxiety about political dysfunction in Washington — rattled markets, pushing stock-index futures to fresh four-month lows.
However, a subsequent surge of bond buying — as investors snapped up a 30-year yield of more than 5% — helped lift S&P 500 futures to minor losses on the session. Bond prices move in the opposite direction to bond yields.
The choppiness came after the S&P 500 shed 1.4% on Tuesday to close at its lowest level since the start of June as investors balked at the sight of benchmark borrowing costs hitting fresh 16-year highs — a reflection of concerns that a sturdy U.S. economy will cause the Federal Reserve to keep interest rates higher for longer.
The trend is being felt globally, with benchmark German bund yields
BX:TMBMKDE-10Y
and U.K. gilts
BX:TMBMKGB-10Y
hitting multi-year highs, too, while the DAX equity index
DX:DAX
in Frankfurt trades at its lowest since March.
“We’re at risk of repeating ourselves on a daily basis now, but the last 24 hours saw the relentless bond sell-off continue, with yields rising to fresh multi-year highs on both sides of the Atlantic,” said Jim Reid, strategist at Deutsche Bank.
“I struggle to see how the recent yield moves don’t increase the risk of an accident somewhere in the financial system given the relatively abrupt end over recent quarters of a near decade and a half where the authorities did everything they could to control yields,” Reid added.
U.S. economic updates set for release on Wednesday, include the ADP private sector employment report for September, due at 8:15 a.m. Eastern, the final reading of the S&P services PMI for September at 9:45 a.m., as well as the August factory orders and the September ISM services report, both at 10 a.m.
There will also be more chatter from Fed officials. Fed Governor Michelle Bowman is due to speak at a banking conference at 10:25 a.m., and Chicago Fed President Austan Goolsbee will give welcoming remarks at banking symposium, starting at 10:30 a.m.
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