US stock futures faltered on Tuesday, indicating that markets will take a breather following volatility in equities and bonds.
The futures contract linked to the S&P 500 fell less than 0.1%, indicating that the broad market index fell to a lower position after rising on Monday at its best day since June. Futures linked to the Nasdaq-100 showed 0.1% lower.
Investors say their focus is mainly on central bank officials for directions on how to move monetary policy off the road. This will determine their appetite for government bonds and inflation-adjusted returns. A flood of easy money by the Federal Reserve since the pandemic hit last year has helped weaken yields on bonds and fueled a rise in stock markets over the past year.
This phenomenon seems to have come to a standstill in recent weeks: money managers have adjusted their portfolios in anticipation of an economic boom and a possible increase in inflation, which has led to a sell-off of government bonds. Yields rose last week as bond prices fell, leading to turbulent equities. Bond markets have stabilized since then and equities rose higher on Monday.
“We’re just taking a breather after yesterday,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.