Treasury Bonds Sale; Tech Rebound, Nasdaq Hits Correction

Treasury Bonds Sale; Tech Rebound, Nasdaq Hits Correction

The U.S. Treasury will auction $58 billion of three-year notes later in the day.  Results of the sale will be posted at 1 PM ET (1800 GMT). 

Moreover, it intends to sell $38 billion of 10-year notes on Wednesday and $24 billion of 30-year bonds the next day.

The Treasury is starting a three-day sale of bonds that will provide a stern test of the market’s appetite. This is for the deluge of issuance necessary to fund President Joe Biden’s $1.9 trillion stimulus package.

Longer-dated yields have come off their recent highs. Particularly, foreign investors have been attracted to the premiums on offer relative to other safe assets. 

Late Monday, this drove the dollar index to a three-month high. The index gained against traditional lower-yielders such as the yen and Swiss franc. 

During European morning trading, however, those gains unwound with the return of a measure of risk appetite. The dollar index fell 0.4% at 91.997.

Technology Stocks Set for Rebound

The Nasdaq is set to outperform after again being the focus of selling on Monday. With that, U.S. stock markets are set to open higher later in the day.

Nasdaq 100 futures were up 2.4% by 6:30 AM ET (1130 GMT). They were effectively mirroring yesterday’s 2.4% drop in the Nasdaq Composite

Moreover, Dow Jones futures extended gains, up185 points, or 0.6%, while S&P 500 futures climbed 1.1%.

The MSCI World equity index was at 82% of world GDP. That is 10% above where it was in Q4 of 1999, at the height of the tech bubble.

The OECD raised its forecast for world GDP growth to 5.6% this year from 4.2% in November. 

Tech-heavy Nasdaq Hits Correction

On Monday, Technology shares sold off in a big downturn pushing the Nasdaq into corrective territory.  Moreover, offsetting stocks that gained on hopes the $1.9 trillion COVID-19 relief bill will propel the U.S. economy.

During the past year’s rally, big technology stocks led Wall Street to scale successive peaks. They, too, fell, with the Nasdaq closing down 2.41 percent. That was roughly 10.5 % below its February 12 record close of 14,095.47.

Financial, restaurant, and travel-related stocks are expected to do well when the economy reopens.  These, however, failed to offset the weight of the bigger tech shares that dominate the US stock market.

Meanwhile, the Dow Jones Industrial Average added 306.14 points, or 0.97 %, to 31,802.44. Furthermore, the S&P 500 shed 20.59 points, or 0.54%, to 3,821.35. The Nasdaq Composite declined 310.99 points, or 2.41%, to 12,609.16.

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