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U.S. Opening Bell: Yields Fall On Fed Leadership Uncertainty; Futures, Stocks Flat

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewNov 09, 2021 07:02
ca.investing.com/analysis/opening-bell-yields-fall-on-fed-leadership-uncertainty-futures-stocks-flat-200492793
U.S. Opening Bell: Yields Fall On Fed Leadership Uncertainty; Futures, Stocks Flat
By Investing.com (Pinchas Cohen/Investing.com)   |  Nov 09, 2021 07:02
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  • Fed's Lael Brainerd being considered for the Chair position
  • Bitcoin trades above $68,000 for the first time
  • Dollar softens

Key Events

On Tuesday, investors increased their US Treasury holdings while futures on the Dow, S&P, NASDAQ and Russell 2000 were little changed. Investor sentiment has been unstead, with some concerned about the current uncertainty surrounding the future leadership of the US Federal Reserve, since President Biden has yet to announce his choice for Chair of the central bank. Others continue to focus on the positives: strong corporate earnings results.

The dollar slid while gold and oil rose.

Global Financial Affairs

Notes with short-dated maturities led a rally in US Treasuries after a report said that President Joseph Biden interviewed Federal Reserve Governor Lael Brainard for the role of Chair. Some market observers consider Brainard to be more dovish than current Chair Jerome Powell.

30-year Treasury yields fell to their lowest level since January 2021, below 1.9%, on concerns about ongoing inflation risk. There continues to be deep uncertainty among bond traders about future economic growth.

Meanwhile, the 10-year yields may have finished a return-move.

10-year Treasuries Daily
10-year Treasuries Daily

They may be heading towards the neckline of an H&S top.

US futures were mixed, with Dow contracts slightly in the red while futures on the S&P 500, Russell 2000 and the NASDAQ 100 were trading higher, with both extremes of the cyclical rotation in the lead.

Futures seemed to be weighing up a warning from the Fed that asset prices could fall if sentiment dampens. The US central bank flagged risks from China's real estate sector as well as concerns about stablecoins—digital tokens pegged to a fiat currency.

In Europe, the STOXX 600 eked out a 0.1% gain, just enough to extend a multiday rally to its ninth consecutive day. This advance is the pan-European's gauge's longest winning streak since Aug. 13, when the benchmark advanced for ten consecutive days. A selloff in insurers offset gains in automobile makers.

Stocks were mixed in the Asian session. Japan's Nikkei 225 fell 0.75%, and Australia's ASX 200 lost a quarter of a percent, dragged down by the financial sector, which overshadowed gains among heavyweight mining shares. Hong Kong's Hang Seng edged 0.2% lower.

China's blue-chip CSI 300 index declined 0.03% on persistent concerns about lack of liquidity in the country's real estate sector. However, the country's primary benchmark, the Shanghai Composite, added a 0.24% after it became clear the highest-ranking members of the Chinese Communist Party are going to approve another term for President Xi Jinping.

The dollar plunged along with Treasury yields.

Dollar Index Daily
Dollar Index Daily

The greenback dropped after Monday's High Wave candle confirmed the resistance at the 94.50 level from a technical perspective. A drop below 93.30 would complete a small-double top, but the same level marks the neckline of a massive double bottom, more than a year long.

Gold retreated slightly after a three-day rally, though at time of writing it was headed higher again. Investors are trying to determine whether the recent rally has legs or if it will fade away.

Gold Daily
Gold Daily

The advance takes on the bearish implications of a weekly H&S continuation pattern.

Bitcoin surged past $68,000 today, setting a new all-time high.

Bitcoin Daily
Bitcoin Daily

The jump completed a possible pennant, a continuation pattern which is bullish and suggests a further upmove after the preceding advance.

Oil gained for the third straight day after Senate Democrats urged US President Joseph Biden to consider tapping emergency oil reserves and perhaps even stop oil exports to limit rising gas prices.

Oil Daily
Oil Daily

The price climbed back into its rising channel and may blow out an H&S top, though it may find resistance by the downtrend (dotted) line from the peak.

Up Ahead

  • China's PPI is released on Wednesday.
  • Also on Wednesday, US wholesale inventories are published.
  • The US bond market is closed in observance of Veterans Day on Thursday.

Market Moves

Stocks

  • The STOXX 600 rose 0.1%
  • Futures on the S&P 500 were little changed
  • Futures on the NASDAQ 100 were up 0.1%
  • Futures on the Dow Jones Industrial Average were 0.1% down
  • Russell 2000 contracts were 0.1% in the green
  • The MSCI Asia Pacific Index was little changed
  • The MSCI Emerging Markets Index rose 0.4%

Currencies

  • The Dollar Index was little changed
  • The euro was little changed at $1.1585
  • The Japanese yen fell 0.2% to 112.91 per dollar
  • The offshore yuan was little changed at 6.3918 per dollar
  • The British pound was little changed at $1.3563

Bonds

  • The yield on 10-year Treasuries declined one basis point to 1.48%
  • Germany's 10-year yield fell one basis point to -0.25%
  • Britain's 10-year yield fell one basis point to 0.85%

Commodities

U.S. Opening Bell: Yields Fall On Fed Leadership Uncertainty; Futures, Stocks Flat
 

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U.S. Opening Bell: Yields Fall On Fed Leadership Uncertainty; Futures, Stocks Flat

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