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Bond Rates Rise And US Futures Decline As Bets On Rate Cuts Fade

house prices in the UK
House prices in the UK plummeted by 5.3%, sparking concerns over property affordability. (PHOTO: iSTOCK)

In front of new jobs data and the release of Federal Reserve meeting minutes, investors lost hope for quick interest rate cuts, and US stock futures fell on Wednesday as bond yields increased.

Loosening Policy

The benchmark S&P 500 (\GSPC) and the Dow Jones Industrial Average (\DJI) both saw a 0.3% decline in futures. Following a brutal session in which tech stocks lost about 1.6% of their value, futures on the Nasdaq 100 (^NDX) fell by about 0.5%.

As stock indexes and bond prices plunged simultaneously on Tuesday, marking the worst start to a year in decades, hopes that the year-end market euphoria would continue into 2024 were severely damaged.

According to the CME FedWatch Tool, traders have begun to reduce their bets on Fed interest-rate reductions; now, 74% of traders are pricing in a March pivot, down from 89% one week ago.

The Fed’s December meeting minutes, which are expected later, may provide some insight into the policymakers’ perception of their proximity to loosening policy in order to achieve a “soft landing” for the economy.

The JOLTS report on job openings will also be closely watched, as expectations of a Fed move have been fueled by the labor market’s surprise resilience. The figures released on Wednesday will set the stage for this Friday’s December US monthly jobs report.

The Labor Market Is Highlighted

Bond

(Photo: The National Interest)

Following a challenging opening day of trading, investors’ focus will shift to the labor market on Wednesday. The JOLTS report, a monthly update on job vacancies and turnover, is scheduled to be released at 10:00 a.m. ET.

The US labor market was already showing signs of slowing down in 2023, as seen by the reduction in job opportunities throughout that year. This week’s data will be crucial in setting the stage for Friday’s December jobs report.

Anticipations are 8.85 million jobs will be open at the end of November, according to the study released on Wednesday.

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