(Bloomberg) — US equity futures wavered as markets head into a crunch period, with key inflation data on Wednesday followed by interest-rate decisions on both sides of the Atlantic.
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Contracts on the S&P 500 posted small moves to trade little changed after the underlying gauge rose 1.2% on Monday, rebounding from its worst start to the month in data going back to 1953. Benchmark Treasury yields rose a second day, while the dollar held Monday’s gains.
The market mood is cautious as investors look to balance US recession fears and the likelihood of a soft landing, amid worries the Fed may be falling behind the curve as the labor market cools. Meanwhile, US political risk is back at the forefront, with former President Donald Trump squaring off in a debate with US Vice President Kamala Harris later Tuesday.
“We need to see what actually plays out and will have the possibility of impacting markets,” Grace Peters, global head of investment strategy at JPMorgan Private Bank, said on Bloomberg TV. “We will be watching tariffs, trade policy, taxes.”
Hedge funds have been unwinding their positions to get cash ready for volatility ahead of the Nov. 5 vote, according to Goldman Sachs Group Inc. data.
At Newton Investment Management, head of fixed income Ella Hoxha is avoiding assets exposed to “a weaker cyclical backdrop, potentially wider credit spreads and weaker commodity currencies,” she said in an interview with Bloomberg TV.
Since Friday, the firm has been boosting safe assets including US Treasury and Japanese government debt, she said.
The European Central Bank’s policy meeting later in the week is also weighing on risk appetite. The central bank meets Thursday, where it is expected to deliver a second interest rate cut this year to tackle a faltering economy.
Morgan Stanley sees the euro sliding toward parity with the dollar within months amid risks of aggressive ECB policy easing. The US bank expects the single currency to slump to $1.02 by year-end, a roughly 7% depreciation from its current level of $1.1037. The call is the most bearish among currency analysts surveyed by Bloomberg.
Key events this week:
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Germany CPI, Tuesday
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US presidential debate between Donald Trump and Kamala Harris, Tuesday
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US CPI, Wednesday
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Japan PPI, Thursday
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ECB rate decision, Thursday
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US initial jobless claims, PPI, Thursday
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Eurozone industrial production, Friday
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Japan industrial production, Friday
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U. Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were unchanged as of 7:16 a.m. New York time
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Nasdaq 100 futures fell 0.1%
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Futures on the Dow Jones Industrial Average were little changed
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The Stoxx Europe 600 fell 0.1%
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The MSCI World Index was little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1037
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The British pound rose 0.2% to $1.3097
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The Japanese yen was little changed at 143.13 per dollar
Cryptocurrencies
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Bitcoin rose 0.2% to $57,152.75
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Ether rose 0.3% to $2,348.92
Bonds
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The yield on 10-year Treasuries advanced two basis points to 3.72%
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Germany’s 10-year yield advanced one basis point to 2.18%
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Britain’s 10-year yield was little changed at 3.86%
Commodities
This story was produced with the assistance of Bloomberg Automation.
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