US stock futures fell Monday and a sell-off in US Treasuries continued through the sixth week after progress towards a new fiscal stimulus bill improved the economic outlook and diminished demand for technology stocks.
Futures pegged to the S&P 500 were down 0.6%, suggesting the broad market may decline after the opening bubble. The benchmark ended the week at 0.8% on Friday, after a volatile week in which investors emerged from major technology stocks. Nasdaq-100 futures were down 1.6% at the start of the new week, indicating that technology stocks were extending losses.
In the bond market, the return is on the 10-year US benchmark. Treasurys rose to 1.610% as investors took money from assets considered the safest in the world. Yields rise when bond prices fall. It ended Friday at 1.551%, the highest level since February 2020.
President Biden’s $ 1.9 trillion Covid-19 contingency plan was approved in the Senate last weekend and a vote will be taken in the House on Tuesday. The additional fiscal expenditure is expected to accelerate the pace of the economic recovery and boost inflation. As the outlook improves, money managers are moving from government bonds and technology stocks to sectors such as banking and energy that are likely to pick up with the economy.
“Incentive controls on people’s bank accounts will be a big driver of growth as US consumer is such a big part of US growth,” said Shaniel Ramjee, a multi-asset fund manager at Pictet Asset Management. “The underlying strength of the US economy, the growing expectation that the stimulus will be completely passed, plus the rising inflation expectations due to oil are all likely to push bond yields further.”