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U.S. equity futures nudged higher in early Monday trading, while Treasury yields and the dollar steadied, as investors enter the final full trading week of the year on a cautious note with eyes on Wednesday’s Federal Reserve rate decision.
Stocks ended modestly lower on Friday, with the S&P 500 drifting into a weekly loss and the Nasdaq retreating back below the 20,000 point mark amid a notable surge higher in Treasury bond yields tied to concern over President-elect Donald Trump’s economic agenda.
Benchmark 10-year Treasury note yields, which move in the opposite direction of prices, rose 24.5 basis points last week amid the market’s biggest five-day move in more than a year. The paper was last seen trading at 4.381% heading into the start of the New York session.
Traders also pared bets on Fed rates cuts into 2025, and while they have locked-in a quarter point reduction from the central bank on Wednesday, the CME Group’s FedWatch suggests not more than two more over the coming twelve months.
Rate-sensitive 2-year notes were last marked a 4.232% in overnight trading, around 1 basis point lower from Friday’s close, with the U.S. dollar index marked 0.02% lower against a basket of its global peers.
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Investors may be also content to protect the hard-fought gains recorded this year as the move into the traditionally thin late-December markets, with the S&P 500 now up nearly 26.4% since January.
U.S. stocks are also trading at the highest valuation gap compared to their international peers on record, with domestic indices now representing an all-time high of 65% of global market value.
Related: Donald Trump’s plans will test Fed interest rate cut bets in 2025
Heading into the start of the trading day on Wall Street, futures contracts tied the S&P 500 suggest a 9 point opening bell gain, while those linked to the Dow Jones Industrial Average are priced for a 34 point advance.
The tech-focused Nasdaq, meanwhile, is called 55 points higher with Nvidia (NVDA) , Palantir (PLTR) and Tesla (TSLA) active in premarket trading.
MicroStrategy MSTR shares were also active, rising 5.7% in premarket trading following news that the bitcoin holding company will be inserted into the Nasdaq starting on December 23.
Bitcoin prices, meanwhile, briefly topped $106,00 each in overnight trading and were last marked at $104,695 each, taking their 2024 gain to around 137%.
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In overseas markets, Europe’s Stoxx 600 was marked 0.3% lower in mid-day Frankfurt trading following a muted reading of December business activity and a surprise downgrade from Moody’s on French government date late Friday.
Britain’s FTSE 100, meanwhile, slipped 0.31% in London with investors focused on the final Bank of England rate decision of the year later in the week.
Overnight in Asia, Japan’s Nikkei 225 edged 0.03% lower in Tokyo with a Bank of Japan rate meeting coming Thursday while a series of muted economic data readings from China pulled the MSCI ex-Japan index 0.32% lower into the close of trading.
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