US futures advance with stocks as Fed jitters ease

Bloomberg

US equity futures climbed with European stocks on Monday as markets regained a measure of calm following volatility spurred by the Federal Reserve’s
surprise hawkishness.
Contracts on the S&P 500 advanced after spending most of the Asia session in the red. The Stoxx 600 Index also rebounded from an earlier loss, with UK grocer Wm Morrison Supermarkets Plc surging 32% after rejecting an unsolicited takeover bid, sending shares of peers Tesco Plc and J Sainsbury Plc higher.
Earlier, speculation that faster-than-expected policy tightening by the Federal Reserve would sink the reflation trade spurred caution across markets. The 30-year US Treasury yield dropped below 2% for the first time since February. Asian markets slumped, with the Nikkei 225 down 4% at one point.
But the risk-off mood eventually faded, with the 30-year yield turning higher and a gauge of the dollar reversing an earlier gain. WTI crude oil rises to around $72 a barrel.
Traders will be paying close attention to this week’s appearances by Fed policy makers, including Chair Jerome Powell, for more guidance on a possible timeline for tapering asset purchases. Last week, officials sped up their expected pace of policy tightening amid optimism about the labor market and heightened concerns over price pressures in the recovery from the pandemic.
“We have another possibly two years before the Fed starts to take action,” John Woods, Asia Pacific chief investment officer at Credit Suisse Group AG, said on Bloomberg Television. “So I do anticipate there will be a period of choppy, sideways trading as the volatility associated with this debate in the Fed is reflected in pricing, but absolutely I take the view that yields will tick a little higher.”
Elsewhere, cryptocurrencies fell back, hurt by a general worsening of investor sentiment as well as China’s ongoing crackdown on Bitcoin mining and the prospect of tighter
regulations elsewhere.
The Stoxx Europe 600 was little changed as of 9:46 am London time and futures on the S&P 500 rise 0.3%.
While Futures on the Nasdaq 100 rise 0.4%, futures on the Dow Jones Industrial Average also rise 0.4%.
The MSCI Asia Pacific Index falls 1.5% and the MSCI Emerging Markets Index also sinks as much as 0.9%.
The Bloomberg Dollar Spot Index was little changed and the euro rises 0.2% to $1.1889.
While Japanese yen rises 0.2% to 109.97 per dollar, offshore yuan falls 0.2% to 6.4755 per dollar and the British pound rises 0.2% to $1.3839.
While yield on 10-year Treasuries declined one basis point to 1.42%, Germany’s 10-year yield was little changed at -0.20% and Britain’s 10-year yield was little changed at 0.74%. Brent crude rises 0.1% to $73.61 a barrel and spot gold rises 1.1% to $1,783.97 an ounce.