Futures U.S. stock markets faltered on Tuesday, suggesting markets will take a breather after a volatility attack on both stocks and bonds.
Futures tied to the S&P 500 fell less than 0.1%, signaling a lukewarm decline in the broad market index after rising on Monday on its best day since June. Nasdaq-100-related futures fell 0.1%.
Investors say their focus is on central bank officials to get clues about how monetary policy may change course. This will determine their appetite for government bonds and inflation-adjusted returns. A flood of easy money by the Federal Reserve since the success of the pandemic last spring has helped subdue bond yields and fueled a rebound in stock markets for much of last year.
This phenomenon seemed to stop in recent weeks: money managers adjusted their portfolios in anticipation of an economic recovery and a potential rise in inflation, which led to the sale of government bonds. Yields rose last week as bond prices fell, prompting nervousness in stocks. Since then, bond markets have stabilized and stocks rose on Monday.
“We are taking a breather after yesterday,” said Fahad Kamal, investment director at Kleinwort Hambros.