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Nasdaq Futures Slide With Bonds on Inflation Risks: Markets Wrap

(Bloomberg) — Inflation concerns are rattling investors once again, fueling a selloff in U.S. bonds and sending Nasdaq futures sharply lower.

Ten-year Treasury yields climbed above 1.7% for the first time since January 2020, and the 30-year rate topped 2.4%. The Nasdaq 100 Index, a benchmark for high-valuation stocks that are sensitive to rising yields, sank more than 1%. Tesla Inc. slumped in pre-market trading.

U.S. equities look poised to reverse some of the gains from Wednesday, when markets hit an all-time high. The Federal Reserve’s apparent willingness to keep pumping support into the economy and let it run hotter has spurred bets on faster growth and inflation, sending market expectations of price pressures to multi-year highs.

“Rising real rates have created a hostile environment for longer-duration growth factors,” Jonathan White, head of investment strategy at AXA IM Rosenberg Equities, wrote in a note. “Looking ahead we continue to believe the environment should favor value stocks over growth stocks.”

Read: Fed Keeps Zero-Rate Outlook, Sees Inflation Bump Short-Lived

In Asia and Europe, stocks were boosted by lingering enthusiasm from the Fed’s outlook for stronger growth. Automakers and banks, which tend to outperform during cyclical upswings, led gains in Europe. Japan’s Topix jumped past the 2,000 mark for the first time since 1991, becoming the region’s top-performing major equity index this year.

Elsewhere, oil slipped after U.S. crude stockpiles topped half a billion barrels and the International Energy Agency said global supplies are plentiful. Bitcoin traded around $59,000. The dollar ticked higher.

Japan’s government bond yields rose on a Nikkei report that the Bank of Japan is considering widening the trading range around the 10-year target, which could spur concerns about policy tightening.

These are some key events this week:

Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.

Stocks

Futures on the S&P 500 Index decreased 0.3% as of 6:45 a.m. New York time.The Stoxx Europe 600 Index increased 0.4%.The MSCI Asia Pacific Index rose 0.8%.The MSCI Emerging Market Index gained 0.6%.

Currencies

The Bloomberg Dollar Spot Index rose 0.2%.The euro decreased 0.3% to $1.1941.The British pound increased 0.1% to $1.3975.The onshore yuan was little changed at 6.502 per dollar.The Japanese yen weakened 0.2% to 109.05 per dollar.

Bonds

The yield on 10-year Treasuries jumped eight basis points to 1.72%.The yield on two-year Treasuries increased one basis point to 0.15%.Germany’s 10-year yield gained three basis points to -0.26%.Japan’s 10-year yield climbed one basis point to 0.114%.Britain’s 10-year yield rose five basis points to 0.881%.

Commodities

West Texas Intermediate crude dipped 0.3% to $64.40 a barrel.Brent crude decreased 0.3% to $67.82 a barrel.Gold weakened 0.6% to $1,735.07 an ounce.

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