A global bond selloff, pushing yields to new highs, is pressuring equities worldwide, including for the US open. Surging oil prices are fueling 'higher for longer' inflation concerns, amplified by uncertainty surrounding the post-Powell Fed transition and a lack of significant deliverables from a recent Trump-Xi summit.
📷 Government bonds, a key focus in today's market movements. — Wikimedia Commons
| Time (CY) | Time (ET) | Country | Event | Impact | Previous | Forecast | Actual |
|---|---|---|---|---|---|---|---|
| 13:00 | 06:00 | JP | Prelim Machine Tool Orders y/y | 🟢 LOW | 28.1% | — | — |
| 15:00 | 08:00 | EU | ECB Economic Bulletin | 🟢 LOW | — | — | — |
| 19:15 | 12:15 | CA | Housing Starts | 🟢 LOW | 236K | 244K | — |
| 19:30 | 12:30 | CA | Foreign Securities Purchases | 🟢 LOW | 6.17B | 11.45B | — |
| 19:30 | 12:30 | CA | Manufacturing Sales m/m | 🟢 LOW | 3.6% | 3.5% | — |
| 19:30 | 12:30 | US | Empire State Manufacturing Index | 🟢 LOW | 11.0 | 7.3 | — |
| 20:15 | 13:15 | US | Capacity Utilization Rate | 🟢 LOW | 75.7% | 75.8% | — |
| 20:15 | 13:15 | US | Industrial Production m/m | 🟢 LOW | -0.5% | 0.3% | — |
The European session was dominated by a significant bond market selloff, which saw government bond yields climb across the board. This pushed global equities, including the DAX, into negative territory as investors repriced a more persistent inflation outlook and a 'higher for longer' interest rate environment. Surging crude oil prices, driven by supply concerns and geopolitical risks, further exacerbated these inflationary fears. The lack of concrete progress from the Trump-Xi summit added to a cautious, risk-off mood.
Ahead of the US open, futures indicate a tentative start, with S&P 500 and Nasdaq futures showing slight declines while Dow futures are marginally positive. The market is grappling with the implications of higher bond yields on corporate valuations, particularly for growth-oriented tech stocks. Metals like gold and silver experienced unexpected sell-offs despite the risk-off environment, suggesting a potentially strong dollar or profit-taking. Copper's sharp decline points to underlying concerns about industrial demand and global growth.
US investors will be watching key economic data releases, including industrial production and capacity utilization, along with the Michigan Consumer Sentiment and Inflation Expectations. These data points will be crucial in shaping expectations for the Federal Reserve's policy path, especially with the ongoing discussion around a post-Powell transition. The interplay between inflation, interest rates, and corporate earnings will define the initial trading hours.
The primary risks for the US session revolve around the Michigan Consumer Sentiment and Inflation Expectations data (17:00 CY / 10:00 ET), which could significantly influence Fed rate hike expectations and market sentiment if prints deviate sharply from forecasts. Furthermore, US Industrial Production and Capacity Utilization (16:15 CY / 09:15 ET) will offer insights into the manufacturing sector's health. Any hawkish rhetoric from Fed officials, although no major speeches are explicitly scheduled, could quickly turn sentiment bearish. Geopolitical developments, especially those impacting oil supply, remain an underlying risk. Investors will also be scrutinizing corporate earnings reports from Applied Materials and Deere & Co. for indications of corporate health amidst rising costs.
| Instrument | Support | Resistance | Pivot |
|---|---|---|---|
| US500 | 7400 | 7450 | 7425 |
| US100 | 29000 | 29200 | 29100 |
| DE40 | 23800 | 24000 | 23900 |
| XAU/USD | 4500 | 4580 | 4540 |
| XBR/USD | 107 | 109 | 108 |
| EUR/USD | 1.165 | 1.17 | 1.168 |
| Asset Class | Sentiment | Key Driver | Risk Level | Direction |
|---|---|---|---|---|
| US Equities | NEUTRAL | Higher bond yields and macro inflation concerns; key US data upcoming. | MEDIUM | ↕ |
| European Equities | BEARISH | Global bond rout, surging oil prices, and broader risk-off sentiment. | HIGH | ▼ |
| Gold / Precious Metals | VOLATILE | Sharp sell-off despite risk-off, possibly strong USD or rapid profit-taking. | HIGH | ▼ |
| Forex (USD) | BULLISH | Rising US yields and safe-haven demand. | MEDIUM | ▲ |
| Oil / Energy | BULLISH | Supply worries (geopolitical risks, OPEC+) and persistent demand. | HIGH | ▲ |
| Crypto | VOLATILE | Macro-driven risk-off offsetting institutional interest; correlation with tech. | MEDIUM | ↔ |