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Stable stocks with US futures; Fall of treasures: market envelope

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(Bloomberg) – Shares in Europe were flat with US futures on Monday as investors brace for bond market volatility and the withdrawal of stimulus measures.

Cyclical stocks like energy and banks linked to the economic expansion were among the biggest winners of the Stoxx Europe 600, offsetting declines in tech companies and real estate. S&P 500 and Nasdaq 100 contracts edged up.

T-bill yields continued to climb, with the 10-year benchmark closing in on 2%, triggering a rotation from high-growth stocks to cheaper cyclical stocks.

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Markets face increasing volatility as investors wonder how to revalue assets as the pandemic liquidity that helped drive stocks to record highs is withdrawn. US inflation data this week will be closely watched as the Federal Reserve prepares to bring price pressures under control with faster-than-expected rate hikes.

“The US Fed needs to be cautious in removing policy accommodations – it shouldn’t happen too quickly, otherwise it risks disrupting the rebound in economic growth and could lead to another ‘tantrum’,” Diana Mousina, economic manager of multi-asset group at AMP Capital, said in a note. She sees more volatility this year due to inflation, Fed rate hikes and geopolitics as well as the midterm elections in the United States.

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Goldman Sachs Group Inc. now expects the Fed to hike rates four times this year and begin its process of liquidating its balance sheet in July, if not earlier.

Elsewhere, Bitcoin has traded below $ 42,000 as cryptocurrencies continue to struggle. Crude oil stabilized around $ 79 a barrel after posting the biggest weekly gain in a month.

Here are some key events from this week:

Atlanta Fed Chairman Raphael Bostic discusses the economic outlook Monday during Fed Chairman Jerome Powell’s confirmation hearing to the Senate Banking Committee. Kansas City Fed President Esther George and St. Louis Fed Chairman James Bullard discuss the economy and monetary policy on Tuesday. China PPI, CPIU.S. CPI Wednesday Hearing of the Senate Banking Committee for Lael Brainard, appointed vice-president of the Fed. Richmond Fed Chairman Thomas Barkin Thursday; Philadelphia Fed Chairman Patrick Harker; Chicago Fed Chairman Charles Evans on economics and monetary policy. Thursday Bank of Korea Policy Decision, FridayEarnings 4Q Briefing: Wells Fargo, Citigroup, JPMorgan. New York Fed Chairman John Williams speaks Friday

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For more market analysis, read our MLIV blog.

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The Stoxx Europe 600 was little changed at 9:31 a.m. London time. S&P 500 futures were up 0.1% Nasdaq 100 futures were little changed. Futures contracts on the Dow Jones Industrial Average rose 0.1%. The markets index rose 0.7%

Currencies

Bloomberg Dollar Spot Index was little changed Euro fell 0.2% to $ 1.1335 Japanese yen was little changed at 115.66 per dollar Offshore yuan was little changed at 6.3814 per dollar The British pound was little changed at $ 1.3598

Obligations

The 10-year Treasury bill yield rose three basis points to 1.79% Germany’s 10-year yield rose one basis point to -0.03% The 10-year yield of Britain rose two basis points to 1.20%

Merchandise

Brent crude rose 0.5% to $ 82.16 a barrel Spot gold was little changed

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