U.S. stock futures edged lower in early trading on Monday, starting a new week after a losing one, as markets remained under pressure from rising U.S. Treasury yields.
Dow Jones Industrial Average futures fell 18 points, or 0.03%, while S&P 500 and Nasdaq 100 futures declined 0.1% and 0.3%, respectively.
The Dow Jones Industrial Average fell 0.8% last week, marking its second consecutive weekly decline. The S&P 500 and Nasdaq Composite also dropped 1.4% and 2%, respectively, ending a three-week winning streak.
In Asia, Japan's Nikkei 225 index closed down 0.74%, while South Korea's Kospi index fell 3.12%. In contrast, Australia's S&P/ASX 200 index rose 0.49%, while China's CSI 300 index closed down 1.21%.
Bond yields fuel market pressures
Stocks came under pressure due to rising bond yields worldwide. The yield on the benchmark 30-year US Treasury note surpassed 5.3% last week, reaching levels not seen in nearly 20 years.
Interest rates in Japan, France and Germany have also risen to multi-year highs, increasing pressure on stock markets and prompting investors to reassess their expectations regarding borrowing costs and the course of monetary policy.
Investors have grown increasingly concerned that the war between the United States and Iran could last longer, which could keep oil prices high and push inflation even higher.
US Treasury Secretary Scott Bessent announced measures aimed at helping stabilize the long-term end of the US Treasury yield curve, but the relief provided by this move did not last long.
Treasury moves spark debate over monetary policy
David Zervos, chief market strategist at Jefferies, said the Treasury’s surprise decision to increase the size of its long-term tactical bond repurchases is effectively a Treasury-led twist, intended to counter changes in short-term market conditions, and not a form of quantitative easing.
Zervos explained that repurchase operations do not create cash reserves and therefore lack the direct money injection channel provided by quantitative easing, but at the same time he believes that they leave room for fiscal expansion and provide some inflationary effects similar to those resulting from quantitative easing.
Investors are awaiting new inflation data this week, through the Personal Consumption Expenditures Price Index for July, which is scheduled to be released on Wednesday.
Inflation, the Federal Reserve, and artificial intelligence in the spotlight
In addition to the inflation data, the Federal Reserve is holding its annual symposium in Jackson Hole, Wyoming, where central bank chairman Kevin Warsh is expected to deliver a speech that is attracting widespread attention from the markets.
AI stocks will also remain under scrutiny, with Nvidia and Marvel Technology set to announce their financial results on Wednesday and Thursday respectively.
These results come after a report published by Bloomberg News over the weekend, citing informed sources, that Nvidia had told its customers that prices for servers using Vera Rubin and Blackwell chips would rise by more than 15%.
