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Stock index futures struggled for direction Thursday with some mixed news on the economic front.
S&P futures (SPX), Dow futures (INDU) and Nasdaq 100 futures (NDX:IND) bounced around the unchanged level.
GDP came in at an unrevised 2.1% for the final measure of Q2. But the labor market showed persistent strength. Jobless claims stayed low, edging up to 204K.
Yields retreated after the data but were soon moving up again. The 10-year Treasury yield (US10Y) rose 1 basis point to 4.63%. The 2-year yield (US2Y) was flat at 5.14%.
See how all yields are trading.
“Two market moves dominate today: A further rise in longer-dated Treasury yields …and a further rise in oil prices after yesterday’s US inventory data, which saw Brent (CO1:COM) flirt with USD 97,” SocGen’s Kit Juckes wrote. “Neither of these bits of news is good for risk assets/sentiment, but both are dollar (DXY) supportive.”
“Once again, the big story yesterday was that bond sell-off, which sent Bloomberg’s aggregate global bond index down to its lowest level of 2023 so far,” Deutsche Bank’s Jim Reid said. “But it wasn’t just the 10yr that lost ground, as 30yr Treasury yields also moved up +4.4bps to a new cycle high of their own at 4.72%, which is their highest level since 2011.”
“We can see how that’s increasingly being passed through to the real economy as well, since the MBA’s weekly update of 30yr mortgage rates climbed another 10bps to 7.41%. That’s their highest level since December 2000, and one that’s likely to go higher still given the recent move in rates.”
August pending home sales are still on tap after the start of trading.
The “US calendar (GDP revisions, claims, pending home sales and Kansas Fed index) will be less significant than how Treasuries behave,” Juckes said. “I keep on reading about how ‘higher for longer’ rates are driving yields up but that just seems a convenient tail to pin on the donkey. ‘Too few buyers, one huge seller’ works as well, or better.”
