U.S. and World Markets Extend Losses, New 3-Year High In Bond Yields

Barry Adams
09 May, 2022
New York City

U.S. stock futures are sharply lower as interest rates continued their advance ahead of inflation data this week and growing worries of extended supply disruptions. 

The futures of 10-year U.S. Treasury yield rose to a new 3-year high 3.182% and bond traders are bracing for rates to cross 3.5% in the near future. 

The S&P 500 index futures declined 1.7% and the Nasdaq Composite index futures dropped 2.3%. 

Crude oil futures traded lower on the worries that the China demand may fall further as Shanghai lockdown is expected to be extended till the May's end and European economic activities are falling. 

Over the weekend, G7 nations agreed to impose a ban on Russian oil import and offered additional financial support to Ukraine. 

European market indexes declined nearly 2% on the recession worries and inflation pressures fueled by the rising prices of oil. 

The DAX index declined 1.6%, the CAC-40 index dropped 2%, and the FTSE 100 index declined 1.9%. 

The latest China trade data also weighed on the sentiment after April exports rose 3.9% lower than 14.7% in March and imports were barely unchanged after falling at 0.1% rate in March from a year ago. 

Asian stocks opened lower following volatile trading on Friday in New York. 

The Nikkei index plunged 2.2% to 26,466 after one hour of trading on the rising worries that the U.S. interest rate may rise faster than expected.  

China's authorities are likely to extend lockdown conditions in Shanghai till the end of May and are stepping up mass testing in Beijing. 

Coronavirus cases dropped for the nine days according to city officials in Shanghai but thousands are still infected. 

Just last week,  the city of 25 million residents conducted 63 million PCR tests and 126 million rapid antigen tests. 

Investors will be closely watching the release of the U.S. consumer price inflation report on Wednesday. 

The inflation index is expected to pick up in April 0.4% from March, ahead of the Federal Reserve's 0.2% target rate.  

Japanese yen inched up to 130.86 against a dollar and the U.S. currency continued its advance against all major currencies on the rising U.S. rate expectations. 

The ASX 200 index dropped 1.1% with banks and mining companies leading the losers but energy stocks gained.

Early voting in federal elections began in Australia today with the Prime Minister Scott Morrison led coalition facing voter revolt on the rising cost of living. 

The election date is May 21, 2022.