U.S. Futures Fall With Inflation, Tax Plan in View: Markets Wrap


(Bloomberg) — U.S. equity futures dropped with Treasuries as investors weighed inflation risks and the impact of a minimum corporate tax on technology firms. The dollar ticked up.

Futures on the Nasdaq 100 and S&P 500 declined with European stocks. The 10-year rate added two basis points after Treasury Secretary Janet Yellen said a slightly higher interest-rate environment would be a plus. Oil in New York slipped after rising to $70 per barrel as short-term demand worries continued.

While resurgent inflation has sparked a debate about when the Federal Reserve will start tapering monetary accommodation, recent data including the May nonfarm payrolls report seemed to vindicate the central bank’s dovish stance. Investors are trying to strike a balance between preparing for higher rates and riding a risk-on rally supported by Fed stimulus and a $4 trillion spending plan by President Joe Biden. Traders await the U.S. consumer-price index report Thursday for more clues.

“The slightly softer-than-expected rise in U.S. payroll employment in May probably won’t change the Fed’s thinking, but another pickup in CPI inflation likely to be reported on Thursday will further spur the taper talk,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, wrote in a note.

Yellen said Biden should push forward with his spending plans even if they spark inflation that persists into next year. Meanwhile, the Group of Seven rich nations secured a landmark deal that could help countries collect more taxes from big firms and enable governments to impose levies on U.S. giants such as Amazon.com Inc. and Facebook Inc.

June contracts on the tech-heavy Nasdaq index fell 0.3% highlighting investor concern that a pure growth narrative may no longer be enough to support stocks. Technology shares underperformed in Europe as well, with the benchmark gauge for the sector falling from the highest level since April.

Bitcoin was steady around $36,000 after a roller-coaster ride over the weekend amid a cryptocurrency crackdown in China.

For market commentary, follow the MLIV blog.

Here are key events to watch this week:

Apple holds its annual Worldwide Developers Conference (WWDC) virtually for a second year, to announce new hardware and software and work with developers. Through June 11.European Central Bank decision on Thursday and press conference with President Christine Lagarde.Iran nuclear deal talks reconvene in Vienna Thursday.U.S. consumer price index on Thursday.Group of Seven leaders’ summit starts in Cornwall, England Friday.

These are some of the main moves in markets:

Stocks

The Stoxx Europe 600 fell 0.4% as of 8:16 a.m. London timeFutures on the S&P 500 fell 0.3%Futures on the Nasdaq 100 fell 0.4%Futures on the Dow Jones Industrial Average fell 0.2%The MSCI Asia Pacific Index was little changedThe MSCI Emerging Markets Index fell 0.1%

Currencies

The Bloomberg Dollar Spot Index rose 0.1%The euro fell 0.2% to $1.2148The Japanese yen was little changed at 109.57 per dollarThe offshore yuan fell 0.1% to 6.3992 per dollarThe British pound fell 0.2% to $1.4123

Bonds

The yield on 10-year Treasuries advanced two basis points to 1.57%Germany’s 10-year yield was little changed at -0.21%Britain’s 10-year yield was little changed at 0.80%

Commodities

Brent crude fell 1%Spot gold fell 0.5% to $1,883 an ounce

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