US futures waver amid Federal Reserve policy, growth risks

Bloomberg

US index futures struggled for direction as investors digested the latest hawkish noises from the Federal Reserve amid mounting signs of a global economic slowdown.
Futures on the S&P 500 and Nasdaq 100 fluctuated between modest gains and losses, with markets on edge ahead of the Jackson Hole central bankers’ retreat later this week. The 10-year Treasury yield held above 3% and the dollar was steady.
Investors will pore over Fed Chair Jerome Powell’s speech at Jackson Hole on Friday for a sense of how hawkish the US central bank will be in the face of mounting economic challenges. A global rebound in equities from a June low has stalled ahead of the widely anticipated event.
“Globally we haven’t seen a deceleration like this that has been so synchronised in many decades,” Frances Stacy, director of strategy at Optimal Capital Advisors LLC, said on Bloomberg Television. “I don’t want to be directional” in picking trades, she added.
The latest data showed economic activity weakening from the US to Europe and Asia, underlining the delicate task the Fed faces in hiking interest rates to bring down high inflation without sparking a recession. Still, Minneapolis Fed President Neel Kashkari said inflation is very high and the central bank must act to bring it under control.
The Fed “is probably going to use this weekend to reiterate the fact that rates have more room to climb because they really want to bring inflation down,” Kelvin Tay, Asia-Pacific chief investment officer at UBS Global Wealth Management, said on Bloomberg Television.
The Stoxx Europe 600 index edged lower, heading for a fourth straight day of declines, with retailers under pressure after US peer Nordstrom Inc. trimmed its full-year outlook. Luxury-goods giant Richemont surged after selling a stake in its online business. European natural gas prices increased, with outages at plants in the US and Norway adding to supply curbs from Russia.
Elsewhere, WTI crude oil drifted above $94 a barrel, bolstered by shrinking US stockpiles and possible Opec+ output cuts. Tuesday’s Bitcoin rally proved short-lived, with the cryptocurrency heading back towards $21,000. Futures on the S&P 500 were little changed as of 6:04 am New York time and futures on the Nasdaq 100 were also little changed.
While futures on the Dow Jones Industrial Average were little changed, the Stoxx Europe 600 falls 0.1% and the MSCI World index also slumps 0.2%.
The Bloomberg Dollar Spot Index rises 0.1% and the euro falls 0.3% to $0.9945. While the British pound falls 0.3% to $1.1801, the Japanese yen rises 0.2% to 136.51 per dollar.
The yield on 10-year Treasuries was little changed at 3.04% and Germany’s 10-year yield advanced three basis points to 1.35%. Britain’s 10-year yield advanced five basis points to 2.63%.