U.S. stock futures suggest a flat opening to the North American trading day, but all isn't calm this morning, as U.S. 10-year Treasury yields rose overnight to their highest level again in more than two years.
The bond market is increasingly pricing in the commencement of the Federal Reserve's tapering of its quantitative easing measures as soon as next month. The yield rose as much as 2.873 per cent overnight after closing Friday at 2.824 per cent, its highest since July 2011. The yield has now risen more than 75 per cent since mid-May, putting upward pressure on long-term mortgage rates in the United States and hindering the performance of income-producing securities such as real estate investment trusts in Canada.
The Fed has linked the tapering of its $85-billion-a-year bond buying program to the strength of economic data. There are no major reports due today. Traders this week will be awaiting the release of the minutes from the latest Federal Open Market Committee meeting on Wednesday.
Reflecting concerns over less stimulus ahead from the Federal Reserve, the Dow Jones industrial average suffered its worst weekly percentage loss since May 2012 last week. While some will use this as an opportunity to go bargain hunting, it's a high risk market given more volatility is expected when the Fed begins tapering of the bond-buying program.
Now, here's a closer look at what's going on this morning and what's to come.
Futures: S&P 500 -0.01 per cent; Dow -0.01 per cent; Nasdaq +0.09 per cent; S&P Toronto Unch
Hong Kong's Hang Seng -0.24 per cent
Shanghai composite index +0.85 per cent
Japan's Nikkei +0.79 per cent
London’s FTSE 100 -0.22 per cent
Germany’s DAX -0.15 per cent
France's CAC 40 -0.65 per cent
WTI crude oil (Nymex Oct) -0.39 per cent at $106.91 (U.S.) a barrel
Gold (Comex Dec) +0.21 per cent at $1,373.90 (U.S.) an ounce
Copper (Comex Dec) -0.36 per cent at $3.36 (U.S.) a pound
Canadian dollar at 96.70 (U.S.), versus 96.72 at Friday's North American close.
U.S. dollar index down 0.04 at 81.21
U.S. 10-year Treasury yield 2.82 per cent, up 0.07
ECONOMIC INDICATORS TO WATCH:
No major reports scheduled.
STOCKS TO WATCH:
BlackBerry Ltd. shares are down 2 per cent in the premarket after Jefferies today said the company cut its build plans for BlackBerry 10 handsets by at least another 10 per cent a month, citing its own channel checks. Jefferies dropped its price target to $15 (U.S.) from $18, saying it sees significant risks to consensus estimates over the next couple quarters.
Piper Jaffray upgraded Intel to "neutral" from "underweight" and raised its price target to $22 from $20.
Saks Inc., soon to be acquired by Hudson's Bay Co., said adjusted losses in its latest quarter were 10 cents a share, below the 8 cent-a-share loss analysts projected. Sales were also below forecasts. Shares are down 0.1 per cent in the premarket.
Other earnings today include: Vanguard Health Systems Inc. and Urban Outfitters Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Investors are favouring U.S. stocks over emerging markets by the most ever.
Canadian Couch Potato blog takes a deeper look into three new Vanguard Canada ETFs.
A new U.S.-listed emerging markets dividend growth ETF has arrived.
Price-to-earnings ratios can be misleading.
Controversy erupts as Yahoo CEO Marissa Mayer goes glamorous in a Vogue fashion-heavy profile.
Google's most famous and most imitated job perk has quietly disappeared.
The worst time in the so-called presidential cycle begins now.
The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities. You can also be notified using our dashboard feature when new articles appear from this author. Read more on using this feature here.