Stocks, Bonds Fall on Rate Bets; Futures Drift: Markets Wrap

(Bloomberg) — Stocks fell and Treasuries extended a selloff as investors bet monetary policy will be more hawkish than previously expected. US futures wavered.

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Tech and health-care sectors were among the worst performers in European equities, while the region’s bonds also fell. In Japan, media reports that former BOJ board member Kazuo Ueda is said to be in line for nomination spurred gains in the yen, suggesting investors saw the move as hawkish. Japanese 10-year bond yields climbed to 0.5% for the first time in nearly a month, the level at which the BOJ has set a cap.

Futures on the S&P 500 drifted and those on the Nasdaq 100 were lower after Thursday’s retreat on Wall Street. Lyft Inc. tumbled in premarket trading after its earnings outlook that significantly missed analysts’ estimates.

Treasuries extended losses after investors pushed yields on the two-year Treasury above the 10-year’s by the most since the early 1980s, a sign of flagging confidence in the economy’s ability to withstand additional Federal Reserve hikes.

Next week’s inflation update from the US offers a relevant potential inflection point in the Treasury yield curve, according to Benjamin Jeffery and Ian Lyngen, strategists at BMO Capital Markets Corp. “Our expectations are that the market takes away sufficient angst regarding the prevailing inflation trend to press the inversion trade even further,” they wrote in a note.

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Read: Fed-Funds Call at 8% Keeps One Strategist Ahead of the 6% Pack

Elsewhere, oil jumped after Russia said it plans to cut March production by 500,000 barrels a day.

Gilt yields climbed after data showed the UK narrowly avoided a recession last year.

Bitcoin steadied after a Thursday’s biggest one-day drop since November.

Key events:

• US University of Michigan consumer sentiment, Friday

• Fed’s Christopher Waller and Patrick Harker speak, Friday

Here are some of the main market moves:

Stocks

• The Stoxx Europe 600 fell 0.6% as of 9:46 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures fell 0.3%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index fell 0.7%

• The MSCI Emerging Markets Index fell 1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.2% to $1.0722

• The Japanese yen rose 0.5% to 130.92 per dollar

• The offshore yuan fell 0.3% to 6.8140 per dollar

• The British pound was little changed at $1.2113

Cryptocurrencies

• Bitcoin was little changed at $21,876.55

• Ether rose 0.6% to $1,550.15

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.69%

• Germany’s 10-year yield advanced six basis points to 2.36%

• Britain’s 10-year yield advanced nine basis points to 3.38%

Commodities

• Brent crude rose 2.7% to $86.76 a barrel

• Spot gold rose 0.1% to $1,864.38 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson and Tassia Sipahutar.

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