US futures advance as Fed meeting nears; bonds slide

Bloomberg

US index futures climbed while stocks in Europe struggled for traction at the start of a week in which big corporate earnings continue to roll in and the Federal Reserve is expected to
cut interest rates. Treasuries dropped, pushing the 10-year yield to a six-week high.
Contracts on the S&P 500 edged higher after the underlying gauge climbed near to a fresh record, while futures on the Nasdaq Composite and Dow Jones Industrial Average also gained. Tiffany surged in pre-market trading after LVMH said it has held discussions with the jeweller.
The Stoxx Europe 600 index drifted as banks slipped after HSBC’s disappointing earnings.
The pound steadied versus the euro after the European Union agreed to a Brexit deadline extension, easing the risk of the UK leaving the bloc without a deal on October 31. European bonds edged lower, while gilts were steady.
Investors began the week with analysts predicting the Fed will trim rates by 25 basis points on Wednesday and then signal it’s done with easing for now. Fed Chair Jerome Powell has previously said the wider US economy is in a good place, yet citing slowing global growth and uncertainty around trade as risk factors. After several corporate earnings reports seemed to underscore that view, Alphabet was set to release results on Monday.
Meanwhile, China said parts of the text for the first phase of a trade deal with the US are “basically completed” following consensus on subjects including standards used by agricultural regulators. That followed a similar statement from the US side, with Presidents Donald Trump and Xi aiming to sign a pact in Chile next month. Yields on China’s 10-year notes jumped the most since April.
An Asia-Pacific equities benchmark rose towards its fifth gain in six sessions. Shares increased in Shanghai, with blockchain-related stocks climbing after Chinese President Xi Jinping hailed the technology.
WTI crude oil slipped after the biggest weekly advance in more than a month. Bitcoin jumped as much as 16% from Friday.
Earnings include: Alphabet, Facebook, Pfizer, Airbus, Apple, Exxon Mobil, BP, PetroChina, Credit Suisse, Nomura and Macquarie Group.
The Federal Reserve is expected to lower the main interest rate when policy makers decide on Wednesday.
Futures have priced in about 23 basis points of reduction; the Fed has never withheld easing against such heavily-stacked expectations.
US economic growth is forecast to have slowed to 1.6% in the third quarter. GDP data are due on Wednesday.
The Bank of Japan sets policy on Thursday and Governor Haruhiko Kuroda will hold a news conference.
Friday brings the monthly US non-farm payrolls report.
Futures on the S&P 500 Index advanced 0.3% in New York. The Stoxx Europe 600 Index was little changed. The UK’s FTSE 100 Index dipped 0.1%. The MSCI All-Country World Index gained 0.1%. The MSCI Emerging Market Index jumped 0.5%.
The Bloomberg Dollar Spot Index dipped 0.1%. The euro increased 0.2% to $1.11. The British pound dipped 0.1% to 86.49 pence per euro. The Japanese yen was little changed at 108.71 per dollar.
The yield on 10-year Treasuries gained four basis points to 1.83%. The yield on two-year Treasuries advanced three basis points to 1.65%. Britain’s 10-year yield decreased one basis point to 0.671%. Germany’s 10-year yield increased one basis point to -0.35%.