1. Nasdaq Futures Slide With Bonds on Inflation Risks
Inflation concerns are rattling investors once again, fueling a selloff in U.S. bonds and sending Nasdaq futures sharply lower. Ten-year Treasury yields climbed above 1.7% for the first time since January 2020, and the 30-year rate topped 2.4%. The Nasdaq 100 Index, a benchmark for high-valuation stocks that are sensitive to rising yields, sank more than 1%. U.S. equities look poised to reverse some of the gains from Wednesday when markets hit an all-time high. The Federal Reserve’s apparent willingness to keep pumping support into the economy and let it run hotter has spurred bets on faster growth and inflation.
Futures on the S&P 500 Index decreased 0.3% as of 6:45 a.m. New York time.
The Stoxx Europe 600 Index increased by 0.4%.
The MSCI Asia Pacific Index rose 0.8%.
The MSCI Emerging Market Index gained 0.6%.
2. Treasury Rout Deepens as Traders Brace for Inflation Overshoot
Treasury yields breached more key levels as bond traders boosted bets that the Federal Reserve will allow inflation to overshoot as the U.S. economy recovers. Yields on the benchmark 10-year bond climbed as much as 11 basis points to 1.75% — the highest since January 2020, while the 30-year breached 2.5% for the first time since August 2019. Market measures of inflation expectations are now trading near multi-year highs, with traders paring back bets the Fed would start tightening as soon as late next year. The dollar rebounded against its major peers. Rates have surged this year on expectations that stimulus spending and vaccine rollouts will fuel a sharper economic recovery and a pick up in inflation.
3. Biden to Reach 100 Million Vaccinations Goal Six Weeks Early
President Joe Biden is poised to meet his goal of delivering 100 million Covid-19 vaccine shots in his first 100 days in office as soon as Thursday, reaching the milestone more than a month ahead of time. As of Wednesday, his 57th day in office, the U.S. had vaccinated nearly 98 million people since Biden’s inauguration. The pace of shots has risen to an average of nearly 2.5 million per day for the last week. That leaves Biden within the grasp of his target on Thursday — the 58th day of his presidency — and poised to hit it no later than Friday, barring a major slowdown. With the pace continuing to accelerate, Biden is actually on course to double his goal and see 200 million shots by his 100th day as president.
4. Value Stocks a Week Away From ‘Miracle’ Momentum Boost
Value stocks are morphing into their once-feared momentum rivals, a shift that could accelerate in coming weeks and give their rally a fresh boost. Next Tuesday marks the 12-month anniversary of the MSCI AC World Value Index’s eight-year low, a key timeframe that many quantitative models use to screen for momentum shares to buy. Biden’s victory and his immediate calls for further stimulus sent investors rushing to buy stocks exposed to a jump-started economy and the prospect of rising inflation. That meant a switch to long-overlooked value shares such as those in the financials, energy and industrials sectors and away from high-priced technology stocks, which had dominated momentum investing for most of the last decade.
5. Top China Chipmaker Gets State Funds for $2.4 Billion Plant
Semiconductor Manufacturing International Corp. will build a $2.35 billion plant with funding from the government of Shenzhen, the first major project to emerge from China’s masterplan to match the U.S. and become more self-reliant as the global chip supply dwindles. SMIC on Thursday warned that shortages could worsen this year and next and wallop Chinese businesses if the country doesn’t ramp up domestic capacity now. The company has agreed to a joint venture with the southern municipality in which it will develop and operate a chipmaking plant that can produce silicon of 28 nanometers or above, it said in a stock exchange filing. China wants to build a coterie of technology giants that can stand shoulder-to-shoulder with Intel and TSMC.
6. Australia Posts First Quarterly Decline in Population Since 1916
Australia recorded the first quarterly fall in its population since World War I as more people departed the island nation than arrived in the three months through September. International border closures resulted in the population falling by 0.02%. Net overseas migration dropped by 34,800 in the third quarter, with 55,400 people departing Australia and 20,600 arriving from overseas.
7. Europe Braces for Astra Vaccine Decision After Fiasco
The European Union is bracing for a decision by its health regulator on whether AstraZeneca Plc’s Covid-19 vaccine is safe to use, a key step in the bloc’s efforts to move past a messy suspension by several countries. The European Medicines Agency, which has consistently backed the shot even amid concerns about the risk of blood clotting, will issue updated guidance on Thursday. While a positive recommendation should give governments in France, Germany and elsewhere the confidence to resume using the vaccine, there’s already been some damage done.
8. China Facing Shortages in Feed: Seeks to Cut Corn and Soymeal
China, the world’s biggest importer of corn and soybeans, is seeking to reduce its use in livestock feed in an attempt to curb the country’s dependence on foreign supplies. The top global pork producer has been buying record amounts of both commodities as demand for animal feed, cooking oil and industrial products outstrips the nation’s ability to produce them. China is tackling the issue by boosting support for farmers, raising productivity and reducing wastage, but demand continues to expand driven by economic growth and affluence. The agriculture ministry has drafted a plan to partly replace the usage of corn and soybean meal with alternatives such as rice, wheat, potatoes and other oilseed meals.
9. Oil Is on Longest Run of Declines in Over a Year as Rally Frays
Oil extended declines as inflation concerns rattled broader sentiment and physical markets in Asia cooled. West Texas Intermediate retreated for a fifth straight day, putting the U.S. benchmark on course for the longest losing streak in more than a year. The dollar rose, U.S. equity futures dipped and bond yields climbed amid inflation fears. Brent’s market structure has also steadily weakened in recent days. Oil prices have backtracked this week despite the surprise OPEC+ decision earlier this month to extend output cuts. Concern has arisen that the demand recovery could stall after several European countries halted the use of AstraZeneca Plc’s coronavirus vaccine, the latest blow to a stuttering rollout in the region.
10. Plastic Prices Hit Record High to Stoke Inflation Concerns
For anyone looking or examples of inflation these days, raw materials are a good place to start. Copper, steel — even lumber — are either near or at record highs. And so too are plastics, which often are overlooked but are on a tear right now. Although they’re the building blocks of thousands of everyday products, plastics and their chemical ingredients don’t trade on major commodity exchanges, and large price moves are largely invisible to the wider world. Yet polyvinyl chloride, or PVC, is in the midst of a dramatic rally, driven by a combination of rebounding global consumer demand and production outages from last month’s Texas freeze.
Curated from Bloomberg.com