© Reuters.
Investing.com – US stock futures rallied on Monday as bulls shrugged off short yields that have approached their 15-year highs.
Wall Street data in the pre-trade period showed US equity futures rising as short-term Treasury yields approached their highest levels since 2007.
This comes after the Federal Reserve raised interest rates last week, a relatively strong employment report and ahead of important inflation data.
indicators now
S&P 500 futures rose 0.44%, or 17 points, to reach 3795 levels.
The Dow Jones futures index rose 0.5%, or 160 points, to reach levels of 32580
It increased for futures contracts by 0.4%, or 45 points, to levels of 10942
right now
The dollar reversed its morning gains to give up its early trading gains, dropping 0.3% below 111-point levels, to levels close to 110.5 points.
Although trading near its 15-year high, the 10-year Treasury yield fell from 0.03 to 4.13%, while the two-year Treasury yield reached 4.7%. indicating the continuous inversion of the yield curve.
Gold futures offset their morning losses, climbing near $, or 0.15%, to levels of $ 1,678.7, while spot prices – spot gold contracts for the US dollar are still in drop in the range of $ 3.5, or 0.21%, to $ 1,677.9.
what happened?
On Friday, the Dow Jones Industrial Average, + 1.26%, was up 402 points, or 1.26%, to 32,403 levels.
While the Standard & Poor’s 500 index rose 1.36%, or 51 points, to 3771 levels.
And it rose for tech stocks by 1.28%, or 132 points, reaching levels at 10475.
What is driving the markets?
Equity futures are also firmer with 2-year Treasury yields TMUBMUSD02Y as bulls shrugged off returns of 4.692%, which is the highest in 15 years, and traders eagerly await price data on consumption later in the week.
Equities have recently continued to be in negative bondage primarily from expectations of the Federal Reserve’s rate hike path, but traders showed signs of ignoring such concerns on Monday.
This follows Wednesday’s 75bp hike in borrowing costs by the Federal Reserve and a stronger-than-expected employment report on Friday.
Federal officials
Tom Barkin, president of the Federal Reserve Bank of Richmond, told CNBC that interest rates will rise at a slower pace, but over a longer period and with a higher rate target cycle.
Barkin’s tone matches that of President Jerome Powell, an indication that the central bank is trying to steer the market away from hopes of an impending turnaround.
The two-year Treasury yield, which was below 80 basis points at the start of the year, rose 2 basis points to 4.713%. Over the same period, the S&P 500 lost 20.9%.
return of the hawks
“Summarizing what happened last week, dovish pivot trading has now moved one way and the other over the course of the week,” said Jim Reed, strategist at Deutsche Bank (ETR).
“But Powell’s FOMC press conference brought the hawks back to the upside,” added the Deutsche Bank (ETR 🙂 strategist.
Barkin also noted that by the time the Fed reaches its December policy decision, it will have seen two more CPI reports, the first coming out Thursday.
medium-term التجديد
Before that, investors may be thinking about the mid-term elections in the United States that will dominate American public opinion in the coming days in fierce competition between the poles of power.
“History suggests that midterm elections have a huge impact on markets, as they always seem to meet once the middle period (or presidential election) is over,” said Deutsche Reed’s Reid.
