Bond yields, dollar rise after Powell nomination

Futures tied to the S&P 500 ticked down less than 0.1% on Tuesday, suggesting the broad-market index could hover after closing down 0.3% on Monday. Nasdaq-100 futures slipped 0.2% after the opening bell, pointing to losses in technology stocks. Stocks took a leg down on Monday, particularly those sensitive to high interest rates, such as technology companies.

Bond yields continued to rise on Tuesday, with investors pricing in greater certainty in the near future for the Fed’s plans to reduce asset purchases and raise interest rates. The yield on the two-year note climbed up to 0.644%, the highest level since March 2020. The yield on the benchmark 10-year bond also rose to 1.656%.

“Volatility is concentrated at the short end of the curve because that is where monetary policy expectations are impacting the most,” said Monica Defend, global head of research at Amundi. The market is increasing the rate starting in June, he added.

The dollar strengthened with the WSJ Dollar Index rising to the highest level since July 2020. The index measures the greenback against a basket of currencies.

The survey of purchasing managers in the US is due to be released at 9:45 a.m. ET. Economists are expecting a pick-up in manufacturing and services activity from the data after a slowdown in the third quarter. Similar surveys in the European Union showed activity expanded in November despite an increase in COVID-19 infections.

Earnings are going on. Zoom Video Communications reported a nearly 10% drop in overnight trading after the videoconferencing company reported a slowdown in sales growth. Best Buy fell close to 11% after the electronics retailer also reported a drop in sales.

Income from Dell Technologies, Nordstrom and Gap is expected to come in after the market closes.

Oil prices fell after the US, China, Japan and other countries tap strategic oil reserves to control gasoline prices and inflation, the White House said. Global benchmark Brent crude is trading 0.1% lower at $79.59.

“What matters to the price is how much oil we have above ground, and releasing oil from strategic reserves actually reduces it,” said Bjarne Schildrop, chief commodities analyst at Nordic Bank SEB. “It’s too temporary, it’s not very effective and it can be countered by OPEC+ so easily if they reduce exports a little bit.”

Bitcoin extended its decline on Tuesday after falling over the past two days, falling 0.3% compared to Monday’s 5 p.m. level. It was trading around $56,100, which is up 18% from its latest all-time high.

Overseas, the Turkish lira weakened further, reaching a record low of 12.8 lira, to $1. President Recep Tayyip Erdogan on Monday reiterated his views on interest rates and inflation, putting further pressure on Turkey’s central bank.

The Pan-Continental Stokes Europe 600 declined 0.8%. A spurt in COVID-19 cases and new restrictions in Austria and Germany are weighing on market sentiment in Europe. Among individual stocks, Thyssenkrupp fell nearly 7% after a report that Cevian, a major shareholder, was reducing its stake in the German industrial firm.

In Asia, key benchmarks were mixed. The Shanghai Composite Index rose 0.2%. Hong Kong’s Hang Seng index fell 1.2% as technology stocks fell.

This story has been published without modification to the text from a wire agency feed