US open: Tech rebounds treasury auctions in focus

US stoks are set for a higher open with tech stocks set to out perform after entering correction territory. US bond yields have eased for now but treasury auctions over the coming days could dictate where yields go from here.

USA (1)

US futures

Dow  futures +0.1% at 31892

S&P futures +1% at 3859

Nasdaq futures +2.3% at 12608

In Europe

FTSE +0.35% at 6741

Dax +0.5% at 14450

Euro Stoxx +0.6% at 3784

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Tech rebounds

The Nasdaq futures are pointing to a solid rebound after tanking 2.4% in the previous session and falling into correction territory - closing more than 10% below its closing high on 12th February.

The recent rise in US 10 year bond yields have spoked investors out of high growth tech stocks which are particularly sensitive to interest rate expectations.

However, 10 year treasury yields are easing today to 1.53%, down from 1.62% a fresh post pandemic high struck on Monday.


US treasury auctions

Where bond yields head next depends to a degree on the coming days’ bond auctions and tomorrow’s inflation data due just as the Biden administration’s

The bond auctions kick off with the 3 year today at 18:00. This will be followed by$38 billion of the 10 year treasuries on Wednesday and $24 billion of the 30 year treasuries on Thursday.

Any hint of weak demand or a stronger than forecast CPI reading could see bond yields resume their ascent.


Stocks set to open higher

The easing of treasury yields, soothing words from central banks and intervention from Chinese authorities in China’s stock markets are underpinning equity demand.

The OECD has also upped the global growth forecast to 5.6% from 4.2% thanks to the US stimulus package.

Stocks in focus:

Zoom – trades +3.8% pre-market as tech rebounds and after regulatory filings revealed that founder Eris Yuan transferred 40% of his stake to unspecified beneficiaries last week.

GameStop - +9.8% pre-market and no stranger to big swings in the share price, after announcing that Chewy co founder Ryan Cohen a major GameStop shareholder will lead plans to turn around online sales.


FX – Euro recovers

US Dollar Index moving lower as US bond yields slip back. US Dollar index trades -0.25% at 92.00.

The Eurozone economy performed mildly better than expected in the final quarter of the year. The 3rd revision of Q4 GDP ticked higher to -4.9%, from 5% whilst the employment component was also upwardly revised.

Plans to drastically ramp up the vaccine programme in Germany have also offered support to the common currency. The Eurozone as whole is well behind the likes of the US & UK in terms of vaccinations.

GBP/USD trades +0.4% at 1.3882

EUR/USD trades +0.4% at 1.1891


Oil steady, base metals drop

Weakness in China overnight hit commodity prices. Base metals declined steeply, however oil showed some resilience climbing 1.3% higher in the European session. Those gains have since been pared. However, economies reopening, vaccine rollouts accelerating, and the US stimulus package set for approval means that the oil demand outlook remains supportive.

The weekly API inventory data will be released as usual at 21:30 UTC. Lat week saw the largest US crude build on record owing to the Texas freeze.

Base metals have not fared so well with Copper hanging onto losses down -2.5% and iron still some 1.1% lower.

US crude trades -0.1% at $64.97

Brent trades +0.05% at $68.32

Learn more about trading oil here.

The complete guide to trading oil markets


Looking ahead

18:00 US 3 year bond auction

21:30 API Weekly crude oil stock


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