US and European bond futures drop on economic woes: Markets wrap

(Bloomberg) — U.S. stock index futures and European bonds slipped as investors worried about the twin threats of waning economic growth and stubborn inflation.

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Contracts on the S&P 500 and Nasdaq 100 fell at least 0.3% each after the major indexes capped their eleventh decline in 13 weeks. European shares rose for the first time in four days, with buyers looking down. The dollar erased its losses. Italian bonds fell as investors awaited domestic political tensions. US markets are closed for the Independence Day holiday.

Global stocks and bonds are in the grip of their worst sell-off in at least three decades, as the chances of a recession in the US – or even global – grow, spooking investors. At the same time, static inflation left little room for the Federal Reserve to impose limits on monetary policy tightening. This toxic mixture of markets presents a commercial challenge not seen since the late 1970s.

“The market is starting to worry about economic growth more than just cash withdrawal and inflation,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. Unlike previous recessions, inflation is much higher and unemployment is much lower. These dynamics delay any potential pacifist direction of the central bank despite the rapid shift in interest rate expectations over the past week.”

The MSCI All-Country World Index, the global benchmark, fell 21% in the first half, the worst losses since at least 1988. Similarly, the 14% loss in the Bloomberg Global Index of investment-grade debt was its worst performance since 1990, the earliest date for which records are available.

The dollar was little changed on Monday, after trading lower for most of the European session. Dow Jones reports that US President Joe Biden may announce the elimination of some tariffs on Chinese imports as soon as this week.

In Europe, the Stoxx 600 rose 0.5%. Energy, commodities and healthcare stocks were the biggest gainers.

Italian bonds fell as investors awaited a meeting between Prime Minister Mario Draghi and five-star leader Giuseppe Conte to settle weeks of political tensions. The country’s 10-year bond yield jumped 15 basis points to 3.24%, expanding its spread on German bonds to 1.91 percentage points.

In China, officials have been trying to fend off a Covid outburst that could bomb an area of ​​economic importance. This is another test of Beijing’s strategy of trying to eradicate the pathogen through mass testing and disruptive lockdowns. The measure of Chinese stocks traded in Hong Kong fell to its lowest level since June 24.

Separately, developer Shimao Group Holdings Ltd. said. It did not pay a billion dollar bill that fell due on Sunday, among the biggest dollar payment failures so far this year in China.

Crude oil prices rose as traders put pressure on limited supplies in the face of the global economic slowdown. Bitcoin is hovering above the $19,500 level.

What you will watch this week:

  • Australia rate decision, Tuesday

  • PMIs for the Eurozone, China, India and others on Tuesday

  • US Factory Orders, Durable Goods, Tuesday

  • FOMC Meeting Minutes, US PMIs, ISM Services, JOLTS Job Opportunities, Wednesday

  • Crude Oil Inventory Report from the Energy Information Administration, Thursday

  • Fed Governor Christopher Waller and St. Louis Fed President James Bullard are scheduled to speak on Thursday

  • ECB account for June policy meeting, Thursday

  • US employment report for June, Friday

Some of the main movements in the markets:

Stores

  • S&P 500 futures were down 0.4% as of 3:02 p.m. New York time

  • Futures on the Dow Jones Industrial Average were down 0.3%.

  • The MSCI World Index rose 0.3%.

  • Nasdaq 100 futures fell 0.5%

  • The MSCI Asia Pacific Index is up 0.5%.

  • MSCI Emerging Markets Index Changed Slightly

  • The Ibovespa Brasil Stock Exchange in Sao Paulo fell 0.1%

coins

  • The Bloomberg Spot Dollar Index is unchanged

  • The euro rose 0.1 percent to $1.0425

  • The British pound rose 0.1 percent to $ 1.2108

  • The Japanese yen fell 0.4 percent to 135.70 yen to the dollar

  • The external yuan was little changed at 6.6963 per dollar

  • The Brazilian real changed little at 5.3201 per dollar

  • The Mexican peso fell 0.2 percent to 20.3022 per dollar

bonds

goods

  • West Texas Intermediate crude rose 2.1 percent to $110.66 a barrel

  • Gold futures rose 0.4%, more than any closing gain since June 16

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