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U.S. Opening Bell: Treasury Yields, Base Metals, Dollar Rally; Futures Wobble

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Investors sell 10-year Treasuries 
Iron ore, aluminum boost mining stocks
Bitcoin recovers

Key Events

US futures on the Dow Jones, S&P 500, NASDAQ and Russell 2000 wobbled on Tuesday, signaling that the New York session would open lower, notwithstanding that shares in Europe began the trading day higher. Rising commodity prices benefited mining stocks, which had moved into negative territory as investors continue to monitor diplomatic efforts to scale down tensions on the Ukraine border.

US Treasury yields rallied ahead of Thursday’s US inflation data.

Global Financial Affairs

The STOXX 600 Index was boosted earlier today by a 2.6% jump in basic materials. Iron ore bested the $150 per metric ton mark after China eased steel’s green emissions targets, scaling back the timetable for peak steel metrics. Iron ore was up 70% from its November low. Aluminum opened higher in London, hitting a four-month high, as investors worry that any conflict in Ukraine could dent production from Russia, a major producer. However, the index failed to hold on to earlier gains. 

In London, shares in BP (LON:BP) jumped 1.7% after posting solid earnings and declaring plans for a share buyback program. The British oil and gas major extended gains for the fourth day for a total acceleration of 5.7%, pushing the stock to its highest level since Mar. 4, 2020. However, the stock has slipped and was just 0.6% higher at the time of writing.

Losers during today’s European session included online grocer Ocado (LON:OCDO), which plummeted more than 10%, hitting its lowest level since March 2020 after the company missed full-year profit expectations. In Paris, lender BNP Paribas (PA:BNPP) slipped over 0.3% after the French bank announced disappointing fourth-quarter revenue relative to rising expenses. 

Earlier Tuesday, shares in Asia were mixed. China’s Shanghai Composite closed up 0.67%, outperforming the region. Hong Kong’s Hang Seng slid 1.02%; it was the laggard in the region.

The 10-year Treasury yield extended its advance above 1.900% as traders continue to sell Treasuries after a positive jobs report last week which signalled to investors that the Fed would raise rates in March as planned.

10-year Treasuries Daily

The rise comes after rates completed a symmetrical triangle, bullish upon an upside breakout. The pattern followed a much larger symmetrical triangle, implying a minimum target of 2.3%. Some analysts forecast a climb to 3% as the Fed attempts to cool the hottest level of US inflation in over four decades.

Rising yields are typically bearish for stocks, as they lead to higher rates which makes it challenging to support record equity prices as well as providing an attractive investment alternative.

The dollar climbed along with yields.

Dollar Index Daily

The greenback extended the bounce off the bottom of its rising channel while struggling against the shorter-term falling channel.

Gold retreated on dollar strength.

Gold Daily

The yellow metal has been struggling at the top of a rising channel, bearish—upon a breakout—after the initial plunge. If the price closes above yesterday’s high, we will call it a failed flag, boosting the yellow metal.

Bitcoin climbed for a third day.

Bitcoin Daily

While the cryptocurrency blew out a rising flag, it is finding resistance by the much stronger neckline of a significant H&S top. We expect prices to return toward the $30 level if that trendline holds. If prices fall below $29,000, we could see the digital coin at multi-year lows. 

Traders took profits after oil‘s neck-breaking rally to $93 for the first time since 2014.

Oil Daily

The hourly price completed a bearish triangle, implying a continued retreat below $89.

Up Ahead

Peloton (NASDAQ:PTON) reports earnings after the market close on Tuesday and Walt Disney (NYSE:DIS) reports after the close on Wednesday. 
Crude oil inventories are printed on Wednesday. 
On Thursday, US initial jobless claims are published.

Market Moves

Stocks

The FTSE 100 increased 0.1%
The STOXX 600 rose 0.7% as of 8:54 a.m. London time
Futures on the S&P 500 rose 0.2%
Futures on the NASDAQ 100 rose 0.2%
Futures on the Dow Jones Industrial Average rose 0.2%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index fell 0.3%

Currencies

The British pound rose 0.1% at $1.3553
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.14% to $1.1427
The Japanese yen rose 0.2% to 115.31 per dollar
The offshore yuan rose 0.2% to 6.3734 per dollar

Bonds

Britain’s 10-year yield rose three basis points to 1.45%
The yield on 10-year Treasuries advanced two basis points to 1.94%
Germany’s 10-year yield was little changed at 0.23%

Commodities

Brent crude fell 1.8% to $91.03 a barrel
Spot gold was little changed

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