S&P 500 futures rose Friday as a global bond and equity selloff paused after oil prices retreated from a four-month high. Treasury yields eased from multi-year peaks, but traders now wait on a pivotal US inflation report that could decide whether the Federal Reserve raises rates next week.
S&P 500 futures rose about 0.6% on Friday, alongside Nasdaq futures, as a selloff in global bond and equity markets paused. Brent crude retreated more than 3.5% to $103.64 a barrel, pulling back from a four-month high of $109.97 hit earlier in the day. The barrel price is still set for a weekly gain of over 7.5%, however. Oil flows through the Strait of Hormuz remain restricted as the US and Iran trade attacks.
Treasury yields ease from multi-year peaks
The 10-year Treasury yield eased to 4.94%, just below the almost-three-year high of 4.979% it touched earlier Friday. The 30-year yield slipped back to 5.352% after scaling a fresh 19-year top of 5.3836%. The 2-year yield hit a new 14-month peak of 4.5961% following a 12-basis-point jump on Thursday. According to Reuters, SEB macro strategist Gustav Helgesson said "Markets are pricing in a scenario of higher rates for longer."
Elsewhere, the 10-year Bund yield edged up 0.01 percentage points to 3.51%, taking German borrowing costs to their highest level since 2009, according to the Financial Times. The 10-year gilt yield, meanwhile, fell 0.04 percentage points to 5.34%, just short of its highest level since 2007.
Traders wait on the inflation verdict
The August CPI report due later Friday could make or break the case for a rate hike next week, with forecasts centred on a 0.2% monthly rise in core inflation. Reuters reports markets are pricing about a 67% probability of a Federal Reserve hike. The Financial Times separately reported the probability has risen to roughly 70%, up from 60% early Thursday. Analysts at JPMorgan now expect eight of nine developed-market central banks to raise rates by year end, including the Fed, the Bank of Japan, and all four central banks in Europe.
Europe and Asia diverge
The pan-regional STOXX 600 rose 0.6% on Friday but was still down 1.5% for the week. Asian markets fared worse: MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.5%. Japan's Nikkei tumbled 1.9%. Elsewhere, the dollar index rose 0.1% to 99.17 after gaining 0.4% Thursday. Gold rose 0.7% to $4,344 an ounce after dropping nearly 2% the day before.
Sources: Investing.com, Financial Times
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