US stock futures faltered on Tuesday, suggesting markets will take a breather after a wave of volatility in both stocks and bonds.
Futures pegged to the S&P 500 were down less than 0.1%, indicating a tepid pullback for the broad market index after it rallied sharply on its best day since June on Monday. Futures pegged to the Nasdaq-100 were down 0.1%.
Investors say their focus is entirely on central bank officials for clues as to how monetary policy could shift down the road. That will determine their interest in government bonds and inflation-adjusted returns. A flood of easy money by the Federal Reserve since the pandemic last spring has contributed to moderate bond yields and fueled a rally in stock markets for much of the past year.
This phenomenon seemed to have stalled in recent weeks as money managers adjusted their portfolios in anticipation of an economic recovery and a possible rise in inflation, triggering a sell-off in government bonds. Interest rates rose last week as bond prices fell, sparking jitters in stocks. Bond markets have since stabilized and stocks rallied higher on Monday.
“We’re taking a breather after yesterday,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.