Stocks, US futures gain as Treasuries retreat

Bloomberg

European stocks advanced and US equity futures were steady on Tuesday while oil gained as investors evaluated the prospect of tougher sanctions against Russia. Bonds retreated amid deepening concern about inflation and the policy response.
The Stoxx Europe 600 index edged higher. The energy sector outperformed, with Vestas Wind Systems leading gains for renewable-energy companies amid an uncertain outlook for oil and gas supplies. Contracts on the S&P 500 and Nasdaq 100 were little changed.
Treasury yields rise, with the spotlight remaining on inverted yield curves that may signal an economic downturn should the Federal Reserve tighten aggressively quell price increases. Bond yields across Europe also climbed as traders boosted tightening bets after a hawkish tilt by Australia’s central bank. A report on Tuesday showed input costs for French services firms accelerated to a record.
Market moves are continuing to be shaped by the ramifications of the war in Ukraine and tightening monetary policy as raw-material costs stoke inflation. The Federal Reserve minutes on Wednesday will guide expectations for how rapidly the US central bank will increase rates and reduce its bond holdings. The Covid-19 resurgence in Europe and Asia and renewed lockdowns in China are also clouding the outlook for global growth.
“Between now and June we’re going to get a lot of information the market has to price in,” Subadra Rajappa, head of US rates strategy at Societe Generale SA, said on Bloomberg Television. “In that sort of context, the bias is potentially towards higher yields and flatter curves.”
In the latest step to punish Russia, dollar debt payments from Russian government accounts at US financial institutions have been halted, according to a person with knowledge of the matter. Russia will instead have to choose between draining dollar reserves held within its borders, spending new revenue it collects, or going into default, the official said.
The European Union said work is under way on tightening sanctions, while the US said it may impose further penalties this week. Russia rejected allegations of war crimes, but its increasing isolation is sowing more concerns about disruptions to commodity supplies.
Asian shares made modest gains in a session constrained by market holidays in Hong Kong and China. Australia’s dollar and bond yields surged after the nation’s central bank left borrowing costs unchanged but jettisoned a reference to being patient over policy.
The yen strengthened following comments from Bank of Japan Governor Haruhiko Kuroda, who said its current moves are somewhat rapid. The yen is this year’s weakest performer in the Group-of-10 currency basket.
Meanwhile, JPMorgan Chase & Co. is reviewing its business with some commodity clients after last month’s nickel short squeeze, a move that threatens to drain more liquidity out of the sector.