Treasuries, Dollar Advance Amid Inflation Caution: Markets Wrap

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(Bloomberg) — Treasuries rose with the U.S. dollar as investors debated the impact of resurgent inflation on monetary policy. U.S. index futures witnessed wild swings as several major websites went offline.

The 10-year yield fell back to 1.55% area with focus turning toward Thursday’s consumer-price data that may offer clues on how far the Federal Reserve can postpone a tapering of stimulus. Futures on the S&P 500 were steady, after a sharp drop in the wake of Internet outages. Nasdaq 100 contracts rebounded. Etsy Inc. fell in premarket trading on plans to sell convertible senior notes.

The recovery in the world’s largest economy and the Fed’s continued dovish stance are supporting a risk-on environment, even as gains are punctuated by worries over inflation, high valuations and disparities in global vaccine rollouts. Forecasts for deepening price pressures have underpinned volatility this week as traders await clues to when the U.S. central bank will begin discussions on a tighter policy.

“We advocate looking through near term market volatility and remain pro-risk, predicated on our belief that the Fed faces a very high bar to change its easy monetary policy stance,” BlackRock Investment Institute strategists led by Elga Bartsch wrote in a note.

Multiple websites including New York Times and Amazon Web Services were experiencing outages, according to Downdetector. As traders awaited more details to gauge how far it would hit technology companies, equity futures overcame an initial shock and went back to where they were trading before the news.

Global equities hover around record highs, and Treasury yields have eased for three successive weeks. That suggests the Fed’s assurances are calming fears of a so-called taper tantrum for now. Yet on Tuesday, traders were exercising caution before the inflation data, helping the dollar post its first gain in three days.

Oil extended losses amid concern the recent rally may have gone too far. West Texas Intermediate lost some momentum a day after hitting $70 a barrel for the first time in over two years. Digital tokens including Bitcoin retreated, with the Bloomberg Galaxy Crypto Index shedding as much as 10%.

Fastly Inc. declined 2.1% in early New York trading. The company said it had identified the issue behind an outage and was working on a fix. Amazon.com Inc. rose after a dip.

Etsy dropped 2% after saying it will privately place $1 billion of convertible senior notes due 2028. Tesla climbed 2.6% after posting a 29% month-on-month growth in deliveries of China-made cars in May.

In Europe, the benchmark Stoxx 600 gauge rose for a third day. A gauge of global equities halted a two-day rally.

For market commentary, follow the MLIV blog.

Here are key events to watch this week:

Apple holds its annual Worldwide Developers Conference through June 11.European Central Bank decision on Thursday and press conference with President Christine Lagarde.Iran nuclear deal talks reconvene in Vienna Thursday.U.S. consumer price index on Thursday.Group of Seven leaders’ summit starts in Cornwall, England Friday.

These are some of the main moves in markets:

Stocks

Futures on the S&P 500 were little changed as of 7:04 a.m. New York timeFutures on the Nasdaq 100 rose 0.3%Futures on the Dow Jones Industrial Average fell 0.1%The Stoxx Europe 600 rose 0.2%The MSCI World index was little changed

Currencies

The Bloomberg Dollar Spot Index rose 0.1%The euro was little changed at $1.2182The British pound fell 0.2% to $1.4148The Japanese yen fell 0.2% to 109.46 per dollar

Bonds

The yield on 10-year Treasuries declined two basis points to 1.55%Germany’s 10-year yield was little changed at -0.21%Britain’s 10-year yield was little changed at 0.80%

Commodities

West Texas Intermediate crude fell 1.1% to $69 a barrelGold futures were little changed

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©2021 Bloomberg L.P.



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