US stock futures are rising as a bond rally

Shares, and in particular the shares of technology companies, have been affected by volatile movements in public bond markets in recent trading sessions. A rise in yields last week called into question the prospect of a long period of low interest rates, which had underpinned last year’s stock rise.

Falling yields on Monday helped revive investor stock demand. But money managers remained wary of further rises that could lead to further stock price volatility. Later, investors will analyze a speech by Fed Governor Lael Brainard to get clues as to whether the central bank will pull back higher yields.

“This week is key,” said Andrea Carzana, fund manager at London-based Columbia Threadneedle Investments. If the Fed does not try to lower expectations of higher inflation, yields could continue to rise, shaking the stock market, Carzana said.

“I am waiting for turbulence or volatility to continue with us until we better understand the situation of central banks,” he said.

So far, Fed officials have suggested that the increase in yields reflects expectations of an economic recovery driven by the vaccine program and the likelihood of additional fiscal stimulus. President Biden over the weekend urged the Senate to take swift action after the House approved the $ 1.9 trillion Covid-19 aid package.

Democrats are vying to finish the package before March 14, when certain types of federal unemployment assistance are expected to expire.

It is the pace at which yields have jumped, rather than their absolute level, that has troubled many investors. “I still think stocks are more attractive than bonds, especially if you think there will be some temporary inflation,” Carzana said, adding that stocks offer more protection against rising prices.

Mrs. Brainard will address a conference of the Institute of International Bankers on Financial Stability at 9:05 am ET. John Williams of the New York Fed, Loretta Mester of the Cleveland Fed and Neel Kashkari of the Minneapolis Fed are also scheduled to make public appearances.

The reading of the February manufacturing index of the Institute of Supply Management will be published at ten in the morning and is expected to show another month of strong growth in activity in US factories .

The corporate earnings season is over, with Zoom Video Communications and Novavax scheduled to report quarterly results after markets close.

Oil markets resumed concentration ahead of a meeting of the Organization of the Petroleum Exporting Countries and its partners on Thursday. Brent-crude futures, the benchmark in international energy markets, rose 1.7% to $ 65.52 a barrel, expanding their advance this year to 27%.

Analysts expect the cartel, which has held back millions of barrels of crude a day since last spring to boost prices, to agree to boost production in April.

Improving investor sentiment boosted foreign markets. The Stoxx Europe 600 jumped 1.7%, led by the shares of retail and travel and leisure companies, whose fortunes depend on the reopening of economic activity.

In Asia, the Japanese Nikkei 225 rose 2.4% at the close and Shanghai’s composite index rose 1.2%.

China’s manufacturing activity eased in February, with a slower rate of expansion in nine months, according to a private survey of manufacturers. However, it was the tenth consecutive month in which the Caixin index stood above 50, which separates the expansion from the contraction.

Write to Joe Wallace to [email protected]