Investors will focus on corporate earnings and U.S. economic data this week even as the Fed primes them to expect no change to policy.
Bloomberg – U.S. Treasury yields rose amid confidence the Federal Reserve will remain accommodative even as robust growth takes the world’s largest economy back to pre-pandemic levels. Stock-index futures were mixed.
Havens including the dollar and government bonds were under pressure while copper, seen as a barometer of growth, surged to the highest in a decade. The U.S. 10-year rate bounced back from its 50-day moving average, underscoring the reflation trade is still alive, but remained below the 1.60% level, sustaining a risk-on bid for global assets including emerging markets.
Investors will focus on corporate earnings and U.S. economic data this week even as the Fed primes them to expect no change to policy at their two-day meeting ending Wednesday. While emerging economies from India to Brazil are grappling with a Covid-19 surge or renewed curbs, the developed world is on a firmer recovery path with a faster pace of vaccination.
”We had argued for a likely breakout in bond yields, and continue to believe that equities will be able to tolerate this repricing, as growth-policy trade-off remains supportive,” JPMorgan Chase & Co. strategists Mislav Matejka, Prabhav Bhadani and Nitya Saldanha wrote in a note. “The phase of activity pick-up is ahead of us. At the same time, excess liquidity is likely to stay ample, as policymakers err on the side of caution.”
Data Thursday may show U.S. gross domestic product increased at a 6.9% annualized pace from January through March after a more moderate 4.3% rate in the previous quarter. Other reports this week may show stronger orders for durable goods, a pickup in consumer confidence and robust personal spending. Recent indicators cemented economic optimism, with output at manufacturers and service providers reaching a record high in April.
A slew of earnings from megacaps including Tesla Inc., Facebook Inc. and Apple Inc. will also be parsed this week as investors look for clues on how companies are faring in the recovery.
European stocks were little changed Monday, as gains for banks and travel companies offset losses for carmakers and technology companies. The dollar extended a two-month low, heading for the biggest monthly loss since November.
Oil retreated amid concern demand from India may fall after the nation reported a million new coronavirus cases in three days. Gold fluctuated between gains and losses.
Here are some key events to watch this week:
Bloomberg Live hosts the Bloomberg Green Summit Monday through April 27
Bank of Japan rate decision and Governor Haruhiko Kuroda briefing Tuesday
Fed Chair Jerome Powell holds a press conference Wednesday following the FOMC meeting
Joe Biden makes his first address as president to a joint session of Congress Wednesday
U.S. GDP is forecast to show robust 6% growth in the first quarter, bolstered by government stimulus Thursday
These are some of the main moves in markets:
Futures on the S&P 500 Index dipped 0.1% as of 6:34 a.m. New York time.
The Stoxx Europe 600 Index was little changed.
The MSCI Asia Pacific Index advanced 0.6%.
The MSCI Emerging Market Index gained 0.5%.
The Bloomberg Dollar Spot Index dipped 0.1%.
The euro was unchanged at $1.2097.
The British pound jumped 0.2% to $1.391.
The onshore yuan strengthened 0.2% to 6.485 per dollar.
The Japanese yen strengthened 0.1% to 107.74 per dollar.
The yield on 10-year Treasuries jumped three basis points to 1.59%.
The yield on two-year Treasuries climbed less than one basis point to 0.16%.
Germany’s 10-year yield advanced one basis point to -0.25%.
Britain’s 10-year yield increased two basis points to 0.76%.
Japan’s 10-year yield jumped one basis point to 0.082%.
West Texas Intermediate crude declined 1.7% to $61.08 a barrel.
Brent crude declined 1.8% to $64.95 a barrel.
Gold strengthened 0.1% to $1,779.86 an ounce.