tl;dr
Stock index futures ticked lower on Tuesday, while yields were slightly mixed, a day after the U.S. manufacturing activity came in hotter than expected igniting discussions on the outlook for interest rate cuts. Dow futures (INDU) -0.4%, Nasdaq 100 futures (NDX:IND) -0.2%, and S&P futures (SPX) -0....
Stock index futures ticked lower on Tuesday, while yields were slightly mixed, a day after the U.S. manufacturing activity came in hotter than expected igniting discussions on the outlook for interest rate cuts. Dow futures (INDU) -0.4%, Nasdaq 100 futures (NDX:IND) -0.2%, and S&P futures (SPX) -0.1% were lower. The 10-year Treasury yield (US10Y) rose 2 basis point to 4.35%. The 2-year yield (US2Y) remained unchanged at 4.72%. The March ISM Manufacturing PMI increased to 50.3 vs. 48.3 expected and 47.8 in February, indicating that U.S. manufacturing activity expanded for the first time after contracting for 16 straight months. "The first session of Q2 was a challenging one for US markets. Treasuries saw their weakest session in several weeks, with 10yr yields up by 11.0bps, as stronger manufacturing ISM data reignited doubts over the extent of Fed rate cuts this year," said Deutsche Bank's Peter Sidorov. The ISM manufacturing index surprised everyone by moving into growth territory for the first time since late 2022 with production jumping, new orders rising, and inflation pressures increasing, said ING Economic and Financial Analysis, adding "markets interpreted that as reducing the chances of meaningful Fed rate cuts." Shortly after the start of trading, the February Job Opening and Labor Turnover Survey, or JOLTS, hits. The forecast is for a drop in openings to 8.76M. But the quits rate has garnered more attention recently. The quits rate "is a good leading indicator of the private sector wage component of the employment cost index, the Fed’s preferred measure of wage growth," Pantheon Macro's Ian Shepherdson said. "At 2.1% in January, the quits rate has plunged to a level consistent with year-on-year growth in ECI private wages dropping to about 3% by the summer. If sustained, that would drive down underlying services inflation." Factory orders for February hit at the same time. Economists expect a rise of 1.1%.
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