Opening Bell: U.S. Futures Point To Tech Rebound; Yields Slide, USD Recovers

  • NASDAQ futures rebound
  • Chinese government backed stock buying slows Asian selloff
  • Gold rises for the first time in five sessions

Key Events

US contracts on the , , and took their cues from bonds on Tuesday morning and were all trading higher, ahead of a Treasury auction that may provoke market gyrations.

The dollar fell for the first time in five sessions, mirroring Treasury yields. Bitcoin advanced for the fifth straight day.

Global Financial Affairs

Futures on the NASDAQ jumped over 2%, rebounding from Monday’s 2.4% fall in the underlying , which was pushing the tech benchmark into a 10% correction phase.

NASDAQ Daily

However, the opposite end of the reflation trade, represented by small caps on the Russell 2000 contract, was the second best performer, up over 1.5%, demonstrating that demand for value persists, even amid dip-buying (or ) for the technology heavy NASDAQ.

Either way, the point is that tech contracts recovered because yields eased, evidencing the link between the two as higher rates are seen to hurt the overvalued tech industry.

In Europe, the Index was weighed down by a 1.9% sellof in . This followed a 10% slump in Dallian contracts, the daily limit, after the Chinese government enforced restrictions on its biggest steelmaking city, Tangshan, as part of its anti-pollution efforts. Metal prices also became more expensive as the dollar strengthened.

In the background, the slow vaccine rollout across Europe has, over the past three weeks, pushed investors to divest from the European stock market, as they worry that economic growth there could slow as a result.

Trading in Asia earlier today was mixed. Japan’s outperformed, rising just shy of a full percent, led by property companies which were considered well placed to profit from the post-coronavirus reopening. Hong Kong’s climbed 0.8% after the “national team,” referring to brokers linked to Chinese government-backed funds started buying up stocks to support the market . Meanwhile South Korea’s was lower.

Starting today, the US Treasury Department is scheduled to issue $120 billion of new bonds. Three-year notes will be today and and Treasuries tomorrow. Both events will test last week’s seven-year note auction. The poor result was based on the view that sudden, post-COVID-19 economic growth will overheat the economy, create inflation, triggering the Fed to increase rates.

Yields on the Treasury note fell.

10-year Treasuries Daily

The drop is seen as temporary, before rates resume along a second, steeper rising channel.

The fell along with yields, after matching the number of days rates advanced.

DXY Daily

DXY Daily

The greenback receded from a four-month high. However, after breaking to the topside of a rising channel, the USD may find support above it. Beforehand, the currency completed a falling wedge.

recovered, erasing Monday’s losses.

Gold Daily

The yellow metal bounced off the bottom of a falling channel.

climbed for the fifth straight day amid further signs of institutional demand.

moved higher again after giving up a new high of just under $68 a barrel yesterday.

Up Ahead

  • The US government auctions three-year, 10-year and Treasuries this week.
  • The EIA crude oil inventory is due on Wednesday
  • The US February will offer the latest look at price pressures on Wednesday.
  • The European Central Bank holds its monetary policy and President Christine Lagarde is set to hold a briefing Thursday.

Market Moves

Stocks

  • Futures on the S&P 500 Index advanced 1%.
  • The STOXX 600 Index climbed 0.1%.
  • The Index gained 0.4%.
  • The Index dipped 0.2%.

Currencies

  • The Dollar Index was little changed at 92.03
  • The climbed 0.4% to $1.1889.
  • The climbed 0.5% to $1.3888.
  • The strengthened 0.1% to 6.517 per dollar.
  • The strengthened 0.1% to 108.78 per dollar.

Bonds

  • The yield on 10-year Treasuries fell five basis points to 1.55%.
  • The yield on Treasuries decreased less than one basis point to 0.16%.
  • Germany’s yield fell two basis points to -0.30%.
  • Japan’s yield increased less than one basis point to 0.127%.
  • Britain’s yield declined two basis points to 0.737%.

Commodities

  • West Texas Intermediate crude was little changed at $65.06 a barrel.
  • increased 0.1% to $68.33 a barrel.
  • Gold strengthened 0.9% to $1,699.03 an ounce.
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