US Futures Dip, Stocks Pare Gains as Bonds Advance: Markets Wrap

(Bloomberg) — US equity futures fell and Asian stocks trimmed gains Monday as slowing economic growth and sticky inflation continue to handicap markets.

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In a quiet session ahead of the US Independence Day holiday, an Asian share index climbed but was off session highs, S&P 500 and Nasdaq 100 contracts shed more than 0.5% and European futures pushed higher.

Sovereign debt extended a rally triggered by a reassessment of how high central banks can hike interest rates to fight inflation given that economic expansion is wobbling. Bonds rose in New Zealand and Australia, while Treasury futures edged up — there’s no cash Treasuries trading due to the US break.

The dollar was steady, oil slid closer to $108 a barrel and Bitcoin retreated toward the $19,000 level.

In the US and elsewhere, signs of economic weakness are becoming more apparent in everything from personal spending to manufacturing. Investors are increasingly fretting about recession and its implications rather than focusing exclusively on elevated price pressures.

The psychology of the market is “shifting radically from inflation concerns to one now where we’re firmly focused on growth,” Chris Weston, head of research at Pepperstone Group, wrote in a note. One of the fears now is that the Fed will be too slow in dialing back on rate increases, he said.

In China, officials are trying to repel a Covid flareup that could buffet an economically significant region. That’s another test of Beijing’s strategy of trying to eliminate the pathogen with mass testing and disruptive lockdowns.

Separately, developer Shimao Group Holdings Ltd. said it didn’t pay a $1 billion dollar note that matured Sunday, among the biggest dollar payment failures so far this year in China.

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What to watch this week:

Australia rate decision, Tuesday

PMIs for euro area, China, India among others, Tuesday

US factory orders, durable goods, Tuesday

FOMC minutes, US PMIs, ISM services, JOLTS job openings, Wednesday

EIA crude oil inventory report, Thursday

Fed Governor Christopher Waller, St. Louis Fed…


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