U.S. stock futures slip following S&P 500’s fresh 2023 high, as bond yields rise

What’s driving markets

Last week saw the S&P 500 score its best close of the year and the Dow push past 36,000 for the first time since January 2022. That’s as expectations for the resumption of Fed rate cuts next year have pushed Treasury yields lower.

Read: Dow near record high because traders are calling bluff on ‘higher-for-longer’ Fed

But yields were creeping higher on Monday, with that of the 10-year note
BX:TMUBMUSD10Y
up 3 basis points to 4.246%. Yields tumbled Friday even after Federal Reserve Chairman Jerome Powell pushed back on rate-cut speculation, saying the central bank was prepared to hike again if needed.

Earlier last week, encouraging inflation data and comments from Fed Gov. Christopher Waller helped turbo charge rate cut expectations. A fresh, weak reading on manufacturing from the Institute for Supply Management on Friday also gave those hopes a boost.

Investors will be looking ahead to important data this week to keep supporting the case for a rate cut, with November nonfarm payrolls numbers due at the end of the week.

“Investors expect further fall in U.S. jobs openings, less than 200,000 job additions last month with slightly higher pay on month-on-month basis. The softer the data, the better the chances of keeping the Fed hawks away from the market,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note to clients.

Fed rate cut hopes, alongside rising Middle East tensions triggered a fresh high for gold prices
GC00,
-0.19%
on Sunday, though the metal was paring back on Monday. Bitcoin
BTCUSD,
+3.69%
shot above $41,000 to a level not seen since May 2022.