➤ 10-year Treasurys slip, but yield curve inversion persists.
➤ Sterling holds ground as Brexit limbo continues.
➤ Yen, gold fall as global stocks march higher.
U.S. stocks are poised for gains at the open, tracking gains in the global equity markets, while benchmark Treasurys slipped after days of rallies that reignited concerns of a looming U.S. recession.
Ten-year Treasury yields added 5 basis points to 2.444% at 6:30 a.m. ET, but stayed below the three-month yield of 2.456%. A yield curve inversion does not necessarily indicate that a recession is on the way, though it could signal the need for the Federal Reserve to cut interest rates, former Fed chief Janet Yellen reportedly said at a conference in Hong Kong.
Current indicators show that the U.S. economy looks fairly decent, but if the yield curve inversion persists, it could constrain credit conditions in the U.S., raising the chances of an economic downturn, James Knightley, chief international economist at ING, said in a note.
German Bunds slipped, with 10-year yields ticking up 1 basis point to negative 0.017%. Japanese sovereign bonds fell as 10-year yields recovered 2 basis points to negative 0.066%, while yields on Australian bonds with the same maturity rebounded with a 4-basis-point rise to 1.835%.
Meanwhile, global equity markets largely marched higher, with the MSCI index of Asia-Pacific stocks excluding Japan rising 0.32% and the Stoxx Europe 600 adding 0.42%. Japan's Nikkei 225 recouped yesterday's losses with a 2.15% gain, in contrast with the Shanghai SE Composite, which extended losses for a second day to close 1.51% lower.
The U.K.'s FTSE 100 index rose 0.29%, led by a 5% gain in Ocado Group PLC shares after the company signed an online grocery delivery deal with Coles Group Ltd. in Australia. In France, the CAC 40 index gained 0.59% as Airbus SE shares rose more than 2% after China agreed to buy 300 aircraft from the aerospace giant.
Wall Street looks set to open higher, with S&P 500 futures up 0.47%. Shares in Apple Inc. are up 0.79% in pre-market trading after the tech giant yesterday announced a host of new services, including a news subscription app, a video game subscription offering and a new credit card.
The dollar strengthened 0.36% against the yen to ¥110.37, while the euro traded virtually flat against the greenback. Sterling hovered around the $1.32 level as Brexit uncertainties persist, with the British Parliament yesterday effectively seizing control of the departure process from the government through indicative votes on alternative options regarding the U.K.'s exit from the EU.
"At the current juncture it is highly uncertain how things will play out, but the market is continuing to take an optimistic view that Brexit is heading towards a longer delay and a softer outcome," though the risk of a no-deal Brexit or a general election are rising, Lee Hardman of MUFG Bank said in a note.
In emerging markets, the Turkish lira seesawed against the dollar and was last up 0.48%, while the South African rand tumbled 0.46% and the Mexican peso was broadly unchanged.
Brent crude oil advanced 0.95% to $67.85 per barrel on the ICE Futures Exchange. Gold shed 0.59% to $1,321.10 per ounce.
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The day ahead:
8 a.m. ET — U.S. Fed's Patrick Harker speaks
8:30 a.m. ET — U.S. housing starts (Econoday consensus: 1.201 million)
8:55 a.m. ET — U.S. redbook
9 a.m. ET — U.S. S&P Corelogic Case-Shiller HPI (Econoday consensus: 0% monthly, 4.1% yearly)
9 a.m. ET — U.S. FHFA house price index (Econoday consensus: 0.4% monthly)
10 a.m. ET — U.S. consumer confidence (Econoday consensus: 133.0)
10 a.m. ET — Richmond Fed manufacturing index (Econoday consensus: 12)
8:30 p.m. ET — U.S. Fed's Eric Rosengren speaks