Futures Edge Down as Oil Slumps; Bonds Advance: Markets Wrap

(Bloomberg) — U.S. equity futures slipped, bonds climbed and oil tumbled as rising virus cases and a lockdown in Germany sparked concerns about economic reopening.

Contracts on the S&P 500 Index edged lower amid signs that progress against the pandemic is stalling as global deaths and cases creep higher. Futures on the small-cap Russell 2000 fell more than 1%, while beneficiaries of the reopening trade including Carnival Corp. and TripAdvisor Inc. declined in the U.S. pre-market. European stocks dropped after Chancellor Angela Merkel put Germany into hard lockdown over Easter to try to defuse another wave of coronavirus infections.

The dollar strengthened, while the 10-year U.S. Treasury yield slid for a second day ahead of this week’s offerings, which include a seven-year note, a maturity that fared poorly in last month’s auction. WTI crude oil dropped below $60 a barrel on concerns about the near-term demand outlook.

While a fresh lockdown in Europe’s largest economy is putting investors on the back foot, the stabilization in bond yields is providing some relief against fears that heavy U.S. spending could reignite inflation and force tighter central-bank policy. All eyes turn to Washington later today, where Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell will speak on the pandemic response.

“The path for equity from here is likely to remain choppy, in particular for less cyclical and long duration equity, as further steepening of the U.S. yield curve driven by real rates can further weigh on equity valuation,” Goldman Sachs Group Inc. strategists led by Alessio Rizzi wrote in a note.

These are some key events to watch this week:

Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell make their first joint appearance before the U.S. House Financial Services committee Tuesday.The U.S. Treasury holds auctions of two-, five- and seven-year debt.EIA crude oil inventory report on Wednesday.U.S. personal income and spending data on Friday.

These are some of the main moves in financial markets:


Futures on the S&P 500 Index dipped 0.3% as of 7:51 a.m. New York time.The Stoxx Europe 600 Index decreased 0.1%.The MSCI Asia Pacific Index decreased 0.7%.The MSCI Emerging Market Index fell 0.7%.


The Bloomberg Dollar Spot Index gained 0.4%.The euro fell 0.4% to $1.1884.The British pound decreased 0.5% to $1.3789.The onshore yuan weakened 0.1% to 6.512 per dollar.The Japanese yen strengthened 0.3% to 108.48 per dollar.


The yield on 10-year Treasuries declined five basis points to 1.64%.The yield on two-year Treasuries dipped less than one basis point to 0.15%.Germany’s 10-year yield sank four basis points to -0.35%.Britain’s 10-year yield fell four basis points to 0.778%.Japan’s 10-year yield decreased less than one basis point to 0.082%.


West Texas Intermediate crude dipped 3.6% to $59.36 a barrel.Brent crude declined 3.7% to $62.24 a barrel.Gold strengthened 0.1% to $1,740.61 an ounce.

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