S&P futures exhibited a mixed performance early Tuesday, as traders sought to rebound following a session marked by declines in equities, driven by the upward pressure from rising Treasury yields. Futures for the Dow Jones Industrial Average experienced a decrease of 31 points, reflecting a decline of 0.1%. S&P 500 futures experienced a slight increase, whereas Nasdaq-100 futures edged up by 0.1%. The Dow experienced a decline of over 300 points on Monday, with the S&P 500 and Nasdaq Composite decreasing by 0.8% and 0.9%, respectively.
Treasury yields continued their ascent, as investors expressed concern that enduring inflation could prompt rate hikes from the Federal Reserve. The benchmark 10-year Treasury note yield concluded Monday above 5.2%, approaching levels not observed since 2007. The 30-year reached 5.56%, hovering near a peak not seen since 2004. On Tuesday morning, the 10-year Treasury yield remained relatively stable at 5.234%, whereas the 30-year Treasury yield experienced a decline of 1 basis point, settling at 5.549%. “We think investors should stay positioned for further equity gains, with diversification at the center of their exposure,” Mark Haefele said in a Tuesday morning note.
“We also continue to rate fixed income as Attractive, and believe investors should calibrate both credit risk and duration to their objective and investment horizons. More income-focused investors may prefer short-maturity bonds to reduce duration risk, while those who can tolerate volatility may consider tactical opportunities in medium- to long-duration high-quality bonds.” Investors are set to receive new data on Tuesday that may influence Treasury yields. The September reading on U.S. consumer confidence is scheduled for release at 10 a.m., alongside the August jobs openings and labour turnover survey.
