Stocks and Yields Waver as Fed Caution Lingers: Markets Wrap
(Bloomberg) — Stocks wavered and US Treasury yields hovered near a two-month high as traders held off on making big bets ahead of the Federal Reserve’s final interest-rate decision of 2025.
S&P 500 futures were little changed after the benchmark halted a four-day rally. A dayslong slump in US Treasuries has curbed risk appetite as traders grow cautious about the pace of monetary easing beyond Wednesday’s meeting.
Money markets now see barely two cuts in 2026 after a likely 25 basis-point reduction this week — a retreat from more optimistic forecasts in recent times, when traders had expected a bigger Fed response to a softening labor market. The rate on 10-year US Treasuries was little changed at 4.16% on Tuesday.
“Given all the tension in global bond markets at the moment, the meeting of the Fed could potentially add fuel to the fire,” said Vincent Juvyns, chief investment strategist at ING in Brussels. “Investors will also be watching very closely the results of Oracle and Broadcom. There’s a lot at stake this week.”
Global bond markets have come under pressure as central bankers signal that their easing cycles are nearing an end. On Tuesday, Australia’s Michele Bullock declared her country’s easing phase over, following comments from the European Central Bank’s Isabel Schnabel that she’s comfortable with the next move being higher. The Bank of Japan is expected to hike next week.
While the Fed’s easing cycle remains intact, investors must still contend with a policy committee that has grown fractious, a dearth of economic data after the government shutdown and uncertainty over the stance of Chair Jerome Powell’s successor when his term ends in May.
“A more politicized Fed would likely push front-end yields lower via more aggressive rate-cut expectations,” noted Filip Andersson of Danske Bank A/S. “Higher long-term inflation expectations could lift the inflation risk premium, supporting long-end yields and adding steepening pressure.”
“Slowly but steadily, central banks around the world are starting to tilt away from the idea of lower interest rates, upending yields. …Federal Reserve is expected to reduce interest rates, but even there traders are trimming bets on how far and how fast that will be done.”
— Ven Ram, macro strategist. For full analysis, click here.
Corporate News:
A Bloomberg basket of European defense stocks rose as German lawmakers prepare to approve a record €52 billion ($61 billion) in military procurement contracts. President Donald Trump granted Nvidia Corp. permission to ship its H200 artificial intelligence chip to China in exchange for a 25% surcharge, a move that lets the world’s most valuable company potentially regain billions of dollars in lost business from a key global market. Google has been hit by a European Union investigation over fears it may have abused its dominance by using its own artificial intelligence tools to squeeze out competition. PepsiCo Inc. reached an agreement with activist investor Elliott Investment Management that includes a 20% reduction in its US product lineup and a sharper focus on affordability, while the soda and snacks company also plans layoffs as part of cost reduction efforts. China Vanke Co.’s offshore creditors have started fielding requests for talks with potential advisors, a sign that investors are preparing for a worsening of the developer’s debt crisis. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 10:25 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average were little changed The MSCI Asia Pacific Index fell 0.4% The MSCI Emerging Markets Index fell 0.5% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1647 The Japanese yen fell 0.2% to 156.18 per dollar The offshore yuan rose 0.1% to 7.0643 per dollar The British pound rose 0.1% to $1.3339 Cryptocurrencies
Bitcoin fell 1.3% to $90,185.6 Ether fell 1.2% to $3,110.46 Bonds
The yield on 10-year Treasuries was little changed at 4.16% Germany’s 10-year yield declined two basis points to 2.84% Britain’s 10-year yield declined two basis points to 4.51% Commodities
Brent crude rose 0.3% to $62.67 a barrel Spot gold rose 0.4% to $4,205.70 an ounce This story was produced with the assistance of Bloomberg Automation.
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