Stock futures move higher to Dow’s Record Close

The stock market resumed its rise last week after being hit by sharp movements in the US government bond market weeks ago. Yields on 10-year Treasuries have climbed for six consecutive weeks, the longest winning streak since December 2016. Some money managers are worried that inflation will climb sharply, which could allow the central bank to consider raising interest rates within the next two years. .

Federal Reserve officials have repeatedly sought to allay such fears, reiterating that they will abandon monetary policy in the foreseeable future to help the labor market recover. Investors on Wednesday are looking at the Federal Reserve’s next monetary policy statement for further guidance on the health of the economy and the views of policymakers on rising bond yields and inflation prospects.

‘The fear factor has now disappeared, and markets are now finding an equilibrium. Bond yields will go up, but central banks are not lagging behind, ”says Carsten Brzeski, ING Groupsay

global head of macro research. “The Fed meeting will clearly be crucial and vital to further educating markets on what the Fed intends to do.”

Investors are taking money out of safe government bonds as the economic outlook brightens. They have also started turning away from the technology sector in recent weeks and towards shares in energy producers and banks, which tend to benefit from an economic recovery. Optimism about the rebound was driven by a faster-than-expected vaccination of the vaccine and the implementation of an additional $ 1.9 billion fiscal stimulus.

“With the reopening of the economy, this fiscal stimulus in the form of checks will have a stronger impact on consumption,” he said. Brzeski said. This is important because consumer spending accounts for more than two-thirds of U.S. economic production. “Lower-income households will spend this check almost entirely,” he added.

Some money managers are worried that the big fiscal package could lead to sharply higher inflation and that the Fed will have to raise interest rates for a long period of time, rather than what the policy makers predicted.

Yields on 10-year Treasurys rose Monday to 1,611%. It ended Friday at 1.634%, the highest since February 6, 2020.

“The Fed needs to send a message here that it still needs to be mindful of the significant progress needed before the economy returns to pre-pandemic conditions, but it is not going to be too strong either, these moves are reasoned on the basis of justification. on fundamentals, ”says James Ashley, Head of International Market Strategy at Goldman Sachs Asset Management. “So, how do you calibrate the message in a way that is not too dull or too hawkish?”

Over the weekend, bitcoin crossed $ 60,000 for the first time on Saturday. On Monday, it fell back to close at $ 56,020.86.

Overseas, the pan-continental Stoxx Europe 600 rose 0.5%.

Major stock markets in Asia ended the day on a mixed note. The Shanghai Composite Index fell almost 1% and Kospi in South Korea closed 0.3% lower. The Japanese Nikkei 225 rose 0.2% and Hong Kong’s Hang Seng Index rose 0.3%.

Write to Caitlin Ostroff by [email protected]