U.S. Treasury yields slipped Tuesday as investors speculated about a change in leadership of the Federal Reserve, while equity futures were steady with stocks ahead of inflation data.
Treasuries rose after a report that Fed Governor Lael Brainard, seen as more dovish by some, was interviewed for the central bank’s top job. Contracts on U.S. equity gauges were steady as the Fed warned that asset prices could drop if sentiment sours. Paypal Holdings Inc. fell in premarket trading after its guidance disappointed analysts, while General Electric Co. surged after saying it will split into three companies.
European equities edged higher, while Asian shares drifted. The yield on 30-year Treasury inflation-protected securities slid to a record low, ahead of Tuesday’s report on U.S. producer prices and Wednesday’s data on consumer prices.
Global equities hover near all-time highs as investors weigh strong earnings, easing travel curbs and U.S. infrastructure spending against the risk of persistent inflation that may lead to tighter monetary policy.
“The Fed pointed out to a shift in sentiment or animal spirit as a key risk and that risk is clearly increasing,” Sebastien Galy, senior macro strategist at Nordea Investment Funds, wrote in a note. “We expect the Fed to eventually win this transition, but it should be touch and go.” The Fed on Monday warned that that fragility in China’s commercial real-estate sector could spread to the U.S. if it deteriorates dramatically. Investors are focusing on China Evergrande Group’s bond payment deadlines, with two holders of dollar notes sold by one of its units yet to receive payment for coupons that were officially due Saturday. Elsewhere, Bitcoin jumped past $68,000 for the first time. Cryptocurrency-linked stocks also gained in premarket trading.
Crude prices rose and iron ore fell toward an 18-month low.
What to watch this week:
- China’s Communist Party’s decision-making Central Committee meets through Thursday
- Federal Reserve Bank of San Francisco President Mary Daly speaks Tuesday
- China aggregate financing, money supply, new yuan loans Tuesday
- China PPI Wednesday
- U.S. wholesale inventories, CPI, initial jobless claims Wednesday
- U.S. bond marked is closed in observance of Veterans Day Thursday
- China holds its annual Singles’ Day, the world’s biggest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure buyers with bargains Thursday