U.S. equity futures nudged higher again Thursday, potentially extending Wall Street’s longest wining streak in two years, amid a pullback in Treasury bond yields tied to bets that the Federal Reserve has come to the end of its rate-hiking cycle.
Fed Chairman Jerome Powell could challenge that consensus later today, however, when he speaks as part of a monetary policy discussion at the Jacques Polak Annual Research Conference in Washington at 2:00 pm Eastern time.
Powell, who has said on many occasions that tight financial conditions – including higher Treasury yields – are helping the Fed in its inflation fight, may determine that markets have gotten over their skis with rally that’s that’s extended for the S&P 500 past eight session and loped more than 50 basis points from benchmark 10-year note yields.
Should Powell provide hawkish commentary today, by noting that inflation remains elevated and that job creation and economic growth remain robust, he could trigger a sharp pullback in both markets heading into the final trading days of the week.
Benchmark 10-year note yields, which dipped below 4.5% for the first time since early September in the overnight session, were trading at 4.533% Thursday following a mixed auction of $40 billion in new notes on Wednesday that drew solid foreign interest but softer overall demand.
Prior to Powell’s speech this afternoon, markets will navigate the release of weekly jobless claims data from the Labor Department at 8:30 am Eastern time, which is expected to show that around 219,000 Americans filed for new unemployment benefits last week as hiring continues to cool into the autumn months.
Markets will also digest the impact of a host of tech and media-related earnings from last night, including a mixed fourth quarter report from Disney DIS, the first formal update from chipmaker Arm Holdings since going public earlier this year, videogame maker Take-Two Interactive TTWO and movie theatre chain AMC Entertainment AMC.
With all that ahead, futures are suggesting a mixed open for Wall Street, with contracts tied to the S&P 500 priced for a 3 point gain and those linked to the Dow Jones Industrial Average set for a 43 point boost thanks in part to Disney’s outsized advance.
The tech-focused Nasdaq is set to open little-changed from last night’s closing levels.
In other markets, Brent crude prices, the global benchmark, fell below the $80 mark for the first time since July in overnight trading as investors continue to discount the impact of production cuts from Russia and Saudi Arabia and focus on fading winter demand from China and Europe.
Brent futures contracts for January delivery were last seen trading 63 cents higher on the session at $80.17 per barrel while WTI contracts for December added 63 cents to $75.96 per barrel.
In overseas markets, Europe’s Stoxx 600 was marked 0.43% higher in early Frankfurt trading, powered in part by another solid earnings session and dovish comments on rates hikes from European Central Bank Vice President Luis de Guindos.
Overnight in Asia, the region-wide MSCI ex-Japan benchmark slipped 0.06% into the close of trading, while Japan’s yen hit a fresh one-year low of 151.03 against the U.S. dollar, helping the export-focused Nikkei 225 close 1.49% higher on the session.
Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
