US futures slip before Federal Reserve’s likely ‘hawkish’ hold

BLOOMBERG

US stock futures slipped and Treasuries edged higher ahead of the Federal Reserve interest-rate decision and the US government’s new borrowing plan.
Contracts on the S&P 500 and the Nasdaq 100 dropped by about 0.3%. WeWork Inc plunged 42% in premarket trading after the Wall Street Journal reported that the company plans to file for bankruptcy as early as next week. European retailers outperformed the broader market, led by Next Plc as it increased its profit guidance. Orsted A/S plunged 22% after taking a $4 billion hit on abandoned US wind projects.
The Fed is expected to hold rates steady at a 22-year high for a second meeting, while leaving open the possibility of another hike as soon as December with economic growth staying resilient.
The recent surge in US Treasury yields has contributed to a tightening of financial conditions, leading even hawkish Federal Open Market Committee members to indicate patience over further rate moves.
“The November 1 FOMC meeting has little drama attached to it. Very little is priced in and we do not expect the Fed to surprise,” Steven Englander, head of global G-10 FX research and North America macro strategy at Standard Chartered Bank, wrote in a note.
“The big question is how much of the yield increase at the long end of the curve reflects changed expectations on growth and how much can be viewed as restraining growth down the road.”
Bond dealers are expecting the Treasury to unveil another round of increases this week to its note and bond auctions, though a sizable minority forecast the department will slow the pace of growth to avoid jolting yields higher.
Japan’s markets endured another day of turbulence as authorities fired verbal warnings on the yen and stepped into the bond market.
The Asian equity benchmark advanced 1%, led by Japanese stocks. The yen strengthened from near its weakest level this year after Japan’s foreign exchange chief said he was on standby for intervention. Japanese bond futures pared their losses slightly after the BOJ announced unscheduled bond-purchase operations as the 10-year bond yield approached 1%. In other individual stock moves, First Solar Inc rose amid optimism among analysts of higher shipment volumes. Paycom Software Inc sank 35% after the employment software company slashed its full-year forecast, with the move weighing on peers.
Elsewhere, oil climbed after slumping in the first two days of the week.