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US futures retreat; treasuries edge higher: markets wrap

Ten-year Treasury yields ticked lower, but remained above 0.8%.
Image: Nicolas Asfouri/AFP/Getty Images

US equity futures started the week on the back foot as a stimulus deal remained elusive and coronavirus infections hit a record for a second day. Asian stocks drifted and Treasuries advanced.

S&P 500 futures retreated, and European contracts pointed lower. Stocks slipped in Japan and South Korea, with shares in China underperforming. The dollar strengthened. US House Speaker Nancy Pelosi said the chamber could pass a pandemic relief plan this week, though a deal with the White House remains elusive as chances faded of a resolution before next week’s election. Ten-year Treasury yields ticked lower, but remained above 0.8%.

Elsewhere, oil extended a decline. US stocks rose Friday as investors held out hope for a spending package.

Investors remain focused on the chances of an agreement on a stimulus package as November’s election fast approaches. Still, concerns are mounting that surging virus cases could force additional business closures. The US added more than 85,000 cases in a record figure for one day.

“There is very limited incentive on both sides to get a deal done,” Joseph Shaposhnik, a portfolio manager at TCW, said on Bloomberg TV. “The market has baked that in, has baked in the election and is looking out six months and thinking what are the odds life begins to normalise, a vaccine is introduced.”

President Donald Trump’s chief of staff said the US is “not going to control” the pandemic. The World Health Organisation’s director general said some countries in the northern hemisphere are facing a “dangerous moment” as France’s cases rose by more than 50,000 and infections surge in other parts of Europe.

These are some events to watch this week:

  • The Chinese Communist Party’s Central Committee holds its all-important plenum, where it’s expected to chart the course for the economy’s development for the next 15 years. Through October 29.
  • Brexit negotiating teams have started intense daily negotiations, and these are likely to continue as both sides push to finalise a deal by the middle of November.
  • Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.
  • The first reading of US 3Q GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the major moves in markets:

Stocks

  • S&P 500 futures fell 0.7% as of 6 a.m. in London. The S&P 500 Index rose 0.3% Friday.
  • Topix index fell 0.4%.
  • Australia’s S&P/ASX 200 Index fell 0.2%.
  • South Korea’s Kospi index fell 0.6%.
  • Shanghai Composite Index fell 1.2%.
  • Euro Stoxx 50 futures fell 0.9%.

Currencies

  • The yen fell 0.2% to 104.91 per dollar.
  • The offshore yuan fell 0.1% to 6.6770 per dollar.
  • The euro fell 0.2% to $1.1832.
  • The British pound traded at $1.3024, down 0.1%.
  • The Bloomberg Dollar Spot Index rose 0.2%.

Bonds

  • The yield on 10-year Treasuries fell three basis points to 0.81%.
  • Australia’s 10-year bond yield fell five basis points to 0.81%.

Commodities

  • West Texas Intermediate crude lost 2.1% to $39 a barrel.
  • Gold fell 0.3% to $1,896.02 an ounce.
© 2020 Bloomberg

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