LIVE MARKETS As volatility in bond markets increases, cash may no longer be waste

  • The 11 S&P sectors on the rise, financials in the lead
  • STOXX 600 down 1.1%
  • European tech stocks tumble
  • Gold, oil, dollar, bitcoin lower
  • 10 Year US Treasury Yield ~ 1.44%

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AS THE VOLATILITY OF THE BOND MARKET INCREASES, CASH CAN NO LONGER BE WASTE (1000 ET / 1500 GMT)

Abrupt fluctuations in the US bond markets make it more difficult to earn profits with certain trading strategies and may increase the attractiveness of holding cash.

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Many large macro funds have been burned by the sharp swings in US Treasury bill prices as investors adjust to the prospect of the US Federal Reserve raising rates earlier than expected.

The price revision around this outlook took many investors offside and created large daily jumps in short-term yields, and increasingly choppy trading in longer-term bonds and the yield curve. yields.

“For the first time in a few years… cash has pretty good option value right now,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

“Given the degree of fundamental market volatility, massive swings in positioning, what appears to be a reduced willingness or ability of dealers to store risk, you get surprisingly sharp moves that aren’t supported by changes in policy or economic data changes, and I want to be able to take advantage of them. And that’s really where the value of the cash option comes from, ”added LeBas.

American yield curve

(Karen Brettell)

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WHAT WAY ARE WE GOING? (0843 ET / 1343 GMT)

U.S. stock index futures were mixed on Thursday as stocks continue to be volatile as lack of clarity on the severity of the COVID-19 Omicron variant dominates.

Major averages on Wall Street suffered a collapse late in the session on Wednesday after the first US case was confirmed and each closed below key technical support levels. Read more

Futures on the Nasdaq indicated a lower open for the tech-laden index as shares of Apple Inc (AAPL.O) were down more than 3% pre-market as a result of a Bloomberg report that the company said demand from parts suppliers for its iPhone 13 lineup has slowed. Read more

But the price-weighted Dow envisioned a higher opening, in part thanks to a boost from Boeing (BA.N), which rose more than 5% before the opening bell after the aviation authority China has issued an Airworthiness Directive on the 737 MAX that will help pave the way for the model’s return to service in China after more than two and a half years. Read more

Economic data has shown that initial weekly jobless claims rose less than expected, while layoffs fell to their lowest since 1993. read more

Below is your pre-market snapshot:

Futures contracts mixed after claims data

(Chuck Mikolajczak)

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Report by Sinéad Carew

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