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18 Mar 2021 | 11:22

US pre-open: Futures point to losses as bond yields hit 14-month high

(Sharecast News) - Wall Street futures had stocks opening lower ahead of the bell on Thursday as the 10-year Treasury yield soared to a 14-month high. As of 1220 GMT, Dow Jones futures were down 0.10%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.71% and 1.61% lower, respectively.

The Dow closed 189.42 points higher on Wednesday, rebounding from its retreat away from record highs a session earlier after the Federal Reserve upped its economic forecasts following its two-day meeting.

Stocks were under pressure before the open after the yield on the 10-year Treasury note shot above 1.7% despite reassurance from the Fed that it had no intentions of hiking interest rates anytime soon or tapering its bond-buying program. The 30-year note also traded above 2.5% for the first time since August 2019.

Fed head Jerome Powell stated the central bank wanted to see inflation sit consistently above its 2% target and also witness material improvement in the US labour market before even considering making changes to rates or monthly bond purchases.

The Federal Reserve also upped its economic outlook in order to better reflect expectations for a strong recovery, with Powell now anticipating gross domestic product growth of 6.5% in 2021 rather than initial projections for a reading of 4.2%, but also said it would need to witness a material and sustained advance in prices and a steep drop in unemployment before discussing making changes to its current easy policy stance.

SpreadEx's Connor Campbell said: "The Federal Reserve managed to walk a tricky monetary policy tightrope on Wednesday night. While outlining a new set of forecasts, including the expectation of a 6.5% rise in GDP this year compared to the initial 4.2% estimates, Jerome Powell stated that 'no one should be complacent' about the US recovery.

"Going onto then say the Fed will 'provide the economy with the support that it needs for as long as it takes', the crucial detail came in the central bank's comments on inflation. Powell described any rise above the 2% target as 'transitory', and that such an increase would not meet the standard required for a shift in monetary policy. In other words, an increase in interest rates is still off the table until at least 2024, even if four members of the FOMC would seek a hike in 2022 and seven in 2023."

Also in focus on Thursday will be this week's latest jobless claims figures from the Labor Department at 1230 GMT, with economists expecting a total of 700,000 first-time filings in the week ended 13 March, down from 712,000 a week prior.

Elsewhere on the macro front, the Philadelphia Federal Reserve's manufacturing index for March was slated for release at 1230 GMT, while the Conference Board's February leading index will follow at 1400 GMT.
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