US futures climb as global bonds rally before auctions

Bloomberg

US stock futures climbed on Tuesday, while government bonds across the globe rallied before US debt auctions that have the potential to spark volatility. The dollar falls.
Contracts on the tech-heavy Nasdaq 100 climbed 1.8%, signalling a rebound after an overnight slump in technology stocks amid a rotation to value. European shares opened modestly lower, dragged down by miners. Benchmark Treasury yields fall 5 basis points while those on German and French peers dropped 2 basis points.
The US Treasury will offer $120 billion in coming days that will gauge demand amid the largest short bet on US government debt on record. The auctions will kick off with a sale of $58 billion of three-year notes on Tuesday. Investors have been paring exposure to Treasuries, anticipating that a growth break-out will quicken inflation and bring forward expectations for Federal Reserve rate increases.
Rising long-term borrowing costs are also unsettling equity markets while reflation bets prompt a shift into value and cyclical segments and away from stay-at-home tech stocks.
“We do believe that at this point we will see gyrations just because the market is pricing in quite a lot of positive news,” said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners. Bond yields are only starting to normalise and the 10-year Treasury yield won’t climb to 2% quickly, she added.
Elsewhere, China’s CSI 300 equity gauge dropped again after state-related funds stepped in to alleviate an earlier plunge.
Bitcoin fluctuated around the $54,000 level after hitting a two-week high on more signs of institutional interest. Oil fluctuated near $65 a barrel.
Futures on the S&P 500 Index advanced 1% as of 8:34 am London time and the Stoxx Europe 600 Index climbed 0.1%.
While the MSCI Asia Pacific Index gained 0.4%, the MSCI Emerging Market Index dipped as much as 0.2%.
The Bloomberg Dollar Spot Index sinks 0.4% and the euro climbed 0.4% to $1.1889.
While the British pound climbed 0.5% to $1.3888, the onshore yuan strengthened 0.1% to 6.517 per dollar and the Japanese yen strengthened 0.1% to 108.78 per dollar.
The yield on 10-year Treasuries fell five basis points to 1.55% and the yield on two-year Treasuries decreased less than one basis point to 0.16%.
While Germany’s 10-year yield fell two basis points to -0.30%, Japan’s 10-year yield increased less than one basis point to 0.127% and Britain’s 10-year yield declined two basis points to 0.737%.
West Texas Intermediate crude was little changed at $65.06 a barrel and Brent crude increased 0.1% to $68.33 a barrel. Gold strengthened 0.9% to $1,699.03 an ounce.