Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Yield Decline Revives Investor Demand

By Antonio FerlitoMarket OverviewMar 01, 2021 06:13AM ET
www.investing.com/analysis/yield-decline-revives-investor-demand-200564069
Yield Decline Revives Investor Demand
By Antonio Ferlito   |  Mar 01, 2021 06:13AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Stock futures and government bonds climbed Monday as investors awaited a slate of Federal Reserve speakers and data on the manufacturing sector.

Futures tied to the S&P 500 rose 1.2% and contracts for the NASDAQ advanced 1.5% after a bruising week for technology stocks. The broad advance came as the yield on 10-year Treasury notes, the benchmark borrowing cost in global debt markets, slipped to 1.416% from 1.459% Friday. Yields fall when bond prices rise.

Stocks, and particularly shares of tech companies, have been buffeted by volatile moves in government-bond markets in recent trading sessions.

A lurch higher in yields last week called into question the prospect of a long period of low interest rates, which had underpinned the past year's booming rally in stocks.

Monday's decline in yields helped revive investors' demand for stocks.

But money managers remained wary of further spikes that could spark fresh volatility in share prices. Investors will later parse a speech by Fed governor Lael Brainard for clues about whether the central bank will push back against higher yields.

"This week is key," said Andrea Carzana, a fund manager for London-based Columbia Threadneedle Investments. If the Fed doesn't seek to tamp down expectations of higher inflation, yields could continue to rise, rattling the stock market, according to Mr. Carzana.

"I'm expecting turbulence or volatility to remain with us until we have a better understanding of where central banks stand," he said.

Fed officials have so far suggested the climb in yields reflects expectations for an economic recovery fueled by the vaccine program and the likelihood of additional fiscal stimulus.

President Biden over the weekend urged the Senate to take quick action after the House passed his $1.9 trillion Covid-19 relief package. Democrats are racing to finish the package before Mar. 14, when certain types of federal unemployment assistance are set to expire.

It is the pace at which yields have jumped, rather than their outright level, that has unsettled many investors. "I still think equities are more attractive than bonds, especially if you believe there will temporarily be some inflation,"

Mr. Carzana said, adding that stocks offer more protection against rising prices. Ms. Brainard is due to address a conference of the Institute of International Bankers on financial stability at 9:05 a.m. ET.

The New York Fed's John Williams, Cleveland Fed's Loretta Mester and Minneapolis Fed's Neel Kashkari are also scheduled to make public appearances.

The reading from the Institute for Supply Management's February manufacturing index is due out at 10 a.m., and is expected to show another month of robust growth in activity at U.S. factories.

The corporate earnings season is winding down, with Zoom Video Communications (NASDAQ:ZM) and Novavax (NASDAQ:NVAX) scheduled to report quarterly results after markets close.

Oil markets resumed their rally ahead of a meeting of the Organization of the Petroleum Exporting Countries and its partners on Thursday. Brent futures, the benchmark in international energy markets, rose 1.7% to $65.52 a barrel, extending their advance this year to 27%.

Analysts expect the cartel, which has held back millions of barrels of crude oil a day since last spring to bolster prices, to agree to boost production in April. Improving investor sentiment buoyed overseas markets.

The Stoxx Europe 600 jumped 1.7%, led higher by shares of retail and travel-and-leisure companies, whose fortunes hinge on the reopening of economic activity.

In Asia, Japan's Nikkei 225 rose 2.4% by the close and China's Shanghai Composite Index added 1.2%. China's manufacturing activity eased in February, posting the slowest rate of expansion in nine months, according to a private survey of manufacturers.

Still, it was the 10th consecutive month in which the Caixin index held above the 50 mark, which separates expansion from contraction.

Yield Decline Revives Investor Demand
 

Related Articles

Tim Ord
Is A Large Decline In Markets Looming? By Tim Ord - May 05, 2021

Investors may be wondering if this is the start of a larger decline; according to the chart below the answer is no. The top window is the NYSE Summation index. Markets weaken first...

Yield Decline Revives Investor Demand

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email