US Stock Index Futures Retreat Amid Overnight Jump in Treasury Yields

U.S. stock index futures are trading lower overnight in reaction to a sharp break in Treasury futures. The 10-year U.S. Treasury yield hit 1.6% once again on Friday morning, after President Joe Biden signed his stimulus package into law and announced he would direct states to make all adults eligible for the coronavirus vaccine by May 1.

The yield on the benchmark 10-year Treasury note advanced to 1.6% at 09:30 GMT. The yield on the 30-year Treasury bond rose to 2.348%, Reuters reported.

Yields were also higher after the number of weekly new jobless claims came in lower than expected on Thursday.

At 10:41 GMT, March E-mini S&P 500 Index futures are trading 3914.50, down 22.25 or -0.57%. March E-mini Dow Jones Industrial Average futures are at 32475, down 4 or -0.01% and March E-mini NASDAQ-100 Index futures are at 12830.75, down 217.50 or -1.67%.

Thursday Recap

The blue-chip Dow futures reached an all-time high for the fourth consecutive session on Thursday as worries about rising consumer inflation eased, while a bigger-than-expected fall in weekly initial jobless claims reinforced expectations of a labor market recovery.

Financials and industrials dipped on Thursday after outperforming other major S&P sectors this year as they are seen benefiting from a reopening economy. Tech and consumer discretionary, the two stay-at-home beneficiaries which had recently taken a beating, jumped 1.2% and 1.4%, according to Reuters.

Mega-cap stocks Apple Inc, Microsoft Corp, Facebook Inc and Tesla Inc gained between 1.4% and 2.3% and were among the biggest boosts to the S&P 500, which was less than 15 points below its February 16 all-time high of 3,950.43, Reuters reported.

Friday Outlook

The early trade suggests that Friday will be a “risk off” session. The reaction during the futures session to the quick rise in Treasury yields suggests the pressure will remain on the tech-heavy index as investors are likely to continue to shift toward economically sensitive cyclical stocks. Sharp increases in interest rates can put outsized pressure on high-growth tech stocks as they reduce the relative value of future profits.

In economic news, February’s producer price index is due out at 13:30 GMT, while the University of Michigan’s consumer sentiment and inflation expectations data for March is expected to be released at 15:00 GMT.

For a look at all of today’s economic events, check out our economic calendar.