Treasuries fell and U.S. stock index futures nudged higher on Tuesday as investor fears brought on by the inversion of a key part of the yield curve showed signs of ebbing. The dollar was little changed and European shares drifted.
The yield on benchmark U.S. debt rose after closing below 2.4 percent on Monday, though the spread between three-month and 10-year rates remained in negative territory. Futures on the Dow Jones, Nasdaq and S&P 500 indexes all advanced, while a mixed day across sectors saw the Stoxx Europe 600 trade sideways. In Asia, Japan’s Topix Index jumped more than 2.5 percent, a day after it had its biggest slide this year. European bonds were steady and the euro was little changed against the greenback.
Traders remain on edge following increased volatility at the end of last week after European data disappointed and the U.S. yield curve inverted — a key recession indicator for many in the market. The outcome of trade talks between the U.S. and China and any developments in Britain’s tortuous exit of the European Union could help determine sentiment from here.
“It’s premature to talk about the yield curve meaning that we have to go into recession,” Philip Wyatt, a Hong Kong-based economist for UBS (UBS), said on Bloomberg Television. “It’s possible for the long end to run too far, too fast,” he said of U.S. Treasuries.
Meanwhile, the pound was steady against the dollar after Prime Minister Theresa May lost control over the Brexit process thanks to a vote in the U.K. Parliament. Legislators could now push for alternative options, potentially including a second referendum, or even canceling Brexit.
Elsewhere, oil rebounded as rising tension in Venezuela threatened to further curb supplies from the holder of the world’s largest crude reserves. Gold retreated for the first time in three days. Emerging-market currencies and shares were steady. Here are some key events coming up:
U.S.-China trade talks resume, with a cabinet-level American delegation due in China. U.K. Parliament is set to stage several key votes on Brexit on Wednesday. Fed Governor Randal Quarles will speak Friday to the Shadow Open Market Committee on “Strategic Approaches to the Fed’s Balance Sheet and Communications.”
These are the main moves in markets:
Futures on the S&P 500 Index gained 0.2 percent as of 8:07 a.m. London time. The Stoxx Europe 600 Index climbed less than 0.05 percent, the first advance in a week. The MSCI Asia Pacific Index climbed 1 percent, the largest increase in almost two weeks. The MSCI Emerging Market Index increased 0.1 percent.
The Bloomberg Dollar Spot Index gained 0.1 percent. The euro decreased less than 0.05 percent to $1.1311. The Japanese yen fell 0.2 percent to 110.15 per dollar, the largest fall in more than a week. The MSCI Emerging Markets Currency Index dipped less than 0.05 percent. The Australian dollar jumped 0.2 percent to 0.713 per dollar, the strongest in almost four weeks.
The yield on 10-year Treasuries climbed four basis points to 2.44 percent, the biggest surge in more than three weeks. Germany’s 10-year yield climbed one basis point to -0.02 percent, the first advance in a week. Britain’s 10-year yield gained one basis point to 1 percent, the first advance in more than a week. The spread of Italy’s 10-year bonds over Germany’s dipped one basis point to 2.5326 percentage points.
The Bloomberg Commodity Index climbed less than 0.05 percent. West Texas Intermediate crude declined 0.4 percent to $59.38 a barrel, the lowest in more than a week. LME copper dipped 0.2 percent to $6,324.50 per metric ton. Gold fell 0.4 percent to $1,316.80 an ounce, the largest fall in more than a week.
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