U.S. Futures, Bonds Decline Amid Fragile Sentiment: Markets Wrap


(Bloomberg) — U.S. equity futures and bonds fell anew Monday, squeezed by high inflation, monetary tightening and the prospect of an economic slowdown.

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The drop in S&P 500, Nasdaq 100 and Japan contracts, allied with a jump in Australia’s 10-year sovereign yield, signaled little respite for investors after global shares and bonds posted their fifth straight weekly decline.

In China, data are likely show the economic toll of Covid lockdowns, including the slowest export growth since 2020 and weak imports. Premier Li Keqiang warned about the jobs outlook as Beijing and Shanghai tightened virus curbs.

Oil slipped from near $110 per barrel. Crude is being buffeted by the demand hit from China’s outbreak and supply risks linked to Russia’s war in Ukraine.

Treasury yields, meanwhile, are in sight of levels last seen in 2018. Inflation data this week from the U.S. and elsewhere could drive bond-market swings. A dollar gauge advanced in a sign of investor wariness.

Volatility remains the watchword in global markets on growth, inflation and war risks. Later Monday, President Vladimir Putin is due to speak at Russia’s May 9 Victory Day parade, which marks the anniversary of Nazi Germany’s surrender in 1945. He may indicate his next steps for the Ukraine invasion.

The short-term outlook for the stock market “is still messy and there may be more downside as markets worry about a significant economic slowdown or ‘hard landing’ and aggressive interest-rate hikes,” Diana Mousina, senior economist at AMP Investments, wrote in a note.

Federal Reserve officials have been defending the U.S. central bank against arguments that it’s fallen well behind in the fight against inflation.

Fed Governor Christopher Waller and St. Louis Fed Bank President James Bullard said critics don’t take enough account of the tightening of financial conditions the Fed engineered even before it began raising rates in March.

In the latest Russia-related developments, the Group of Seven most-industrialized countries pledged to ban the import of Russian oil. The European Union is working on a similar plan but Hungary remains a holdout and the bloc’s talks are set to continue.

Here are key events to watch this week:

  • Russian President Vladimir Putin to speak on Victory Day in Russia. Monday

  • Philippines presidential election. Monday

  • China trade data. Monday

  • Bank of Japan releases minutes of its March meeting. Monday

  • Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic speak. Tuesday

  • New York Fed President John Williams, Fed Governor Christopher Waller speak. Tuesday

  • Atlanta Fed President Raphael Bostic speaks. Wednesday

  • China PPI, CPI. Wednesday

  • U.S. CPI. Wednesday

  • San Francisco Fed President Mary Daly speaks. Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.9% as of 8:39 a.m. in Tokyo. The S&P 500 fell 0.6% Friday

  • Nasdaq 100 futures slid 0.9%. The Nasdaq 100 fell 1.2% Friday

  • Nikkei 225 futures lost 1.3%

  • S&P/ASX 200 index futures shed 0.7%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro was at $1.0534, down 0.2%

  • The Japanese yen was at 130.72 per dollar, down 0.1%

  • The offshore yuan was at 6.7200 per dollar

Bonds

Commodities

  • West Texas Intermediate crude fell 0.7% at $109.06 a barrel

  • Gold was at $1,880.75 an ounce

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