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U.S. equity futures extended declines Tuesday, while crude oil prices surged and Treasury yields moved higher, as investors continue to track inflation risks ahead of a series of key labor market releases over the coming days.
A sharp move higher in Treasury bond yields on Monday, triggered by both last week’s sticky February PCE inflation data and a stronger-than-expected ISM reading of manufacturing activity in March, pushed all three major indexes into the red by the close of trading.
The ISM reading also included a big leap in the survey’s prices-paid component, suggesting inflation pressures are accelerating into the spring and could affect the Federal Reserve’s interest-rate-cut forecasts.
The odds of a June cut in fact slipped to nearly 10 percentage points to 56.3%, according to CME Group’s FedWatch tool, while benchmark 10-year-note yields hit a multiweek high of 4.349% in overnight trading.
Markets will likely be eyeing today’s February job-openings data, which the Fed closely tracks, as well as public comments from New York Fed Gov. John Williams, Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly.
Global oil prices were also on the move, with Brent crude futures contracts testing the $90-a-barrel mark, after a strike on Iran’s embassy in Syria killed two top generals and several Revolutionary Guards.
Iranian Supreme Leader Ayatollah Ali Khamenei has vowed to avenge the attack, which Iran has blamed on Israel. Such a move could escalate the region’s months-long conflict.
On Wall Street, health insurance stocks were the notable early movers, with UnitedHealth (UNH) falling nearly 4% and Humana (HUM) down 8%, after the U.S. government kept its Medicare Advantage payouts unchanged, further pressuring the sector’s profit margins.
In broader markets, futures contracts tied to the S&P 500 suggest a 15-point opening-bell decline while those linked to the Dow Jones Industrial Average are indicating a 171-point pullback.
The tech-focused Nasdaq, meanwhile, is priced for a decline of around 52 points.
In Europe, the benchmark Stoxx 600 returned from the four-day Easter holiday break to rise 0.06% in early trading. Factory activity data are showing the region is still in contraction, demonstrating slow improvement from its long winter lull.
Britain’s FTSE 100, meanwhile, was marked 0.31% higher in early London dealing.
Overnight in Asia, Japan’s Nikkei 225 closed 0.09% higher in Tokyo, while the regionwide MSCI ex-Japan index rose 0.75% thanks in part to big gains in Hong Kong and Taiwan.
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