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Stock index futures found firm direction tough to come by Tuesday.
S&P futures (SPX) +0.1% were up slightly. Nasdaq 100 futures (NDX:IND) +0.3% rose and Dow futures (INDU) were flat.
Rates are easing a little after their rapid rise. The 10-year Treasury yields (US10Y) fell 2 basis points to 4.14%. The 2-year yield (US2Y) fell 2 basis points to 4.46%.
Since the jobs report “the 10yr Treasury yield has risen by +27.8bps, which is the biggest 2-day jump since June 2022, back when the Fed suddenly geared up to hike by 75bps for the first time since the 1990s,” Deutsche Bank’s Jim Reid said. “So we shouldn’t underestimate the moves or the volatility.”
“On the topic of greater US economic optimism, our US economists released an updated outlook overnight,” Reid added. “The key change is that they no longer expect a mild recession to emerge during H1-24 and now foresee 2024 real GDP growth at a solid 1.9% (Q4/Q4). They continue to anticipate that the first rate cut will come in June but that the Fed will only cut rates by 100bps this year.”
Investors will get more clues on Fed thinking today.
Starting at noon we will hear from Cleveland Fed President Loretta Mester, then Minneapolis Fed President Neel Kashkari, followed by Boston Fed President Susan Collins. Philadelphia Fed President Patrick Harker speaks postmarket.
“Markets seem more focused on policy expectations than economic fundamentals. In a perfect world, these would be the same thing,” UBS’s Paul Donovan said.