The Tuesday Market Minute
- Global stocks retreat as Europe's coronavirus resurgence triggers fresh lockdown orders in Germany and U.S. health officials question AstraZeneca's newly-released vaccine data.
- The Data Safety Monitoring Board says AstraZeneca's study release may have contained 'outdated information', potentially harming its chances of receiving U.S. approval.
- Germany's Chancellor imposes a hard Easter lockdown for Europe's biggest economy as new infections continue to rise.
- Safe-have flows see benchmark 10-year note yields slip to 1.635% ahead of a $60 billion auction of 2-year notes later today.
- CDC data shows 45 million Americans have now been fully vaccinated against the coronavirus, with more than 126.5 million doses administered as of Sunday.
- U.S. equity futures suggest a softer open on Wall Street heading into today's $60 billion 2-year note auction, joint testimony from Fed Chair Jerome Powell and Treasury Secretary Janet Yellen before Congress and GameStop earnings after the close of trading.
U.S. equity futures edged lower Tuesday, which Treasury yields retreated ahead of a key 2-year note auction, as investors adopted a cautious stance amid concerns for a coronavirus resurgence in Europe and questions linked to AstraZeneca's (AZN) newly-completed vaccine trial.
Germany's Chancellor, Angela Merkel, instituted a hard lockdown over the Easter break for Europe's biggest economy last night, and extended its broader re-opening until at least April 18. That move followed last week's restrictions for the Greater Paris region, which is also seeing a resurgent spike in new infections as the European Union's vaccine strategy continues to stumble.
Investors were further unsettled by a statement from the Data Safety Monitoring Board, a division of the National Institutes of Health which monitors new drug trials, after it said AstraZeneca's newly-released study in north America may have contained 'outdated information."
Collectively, the developments cast a pall over markets in Europe and Asia, pulling oil and commodity prices lower and boosting risk-free assets such as Treasury bonds amid a re-calibration of estimates for the end of the global pandemic.
U.S. stocks are looking soft, as well, with futures contracts tied to the Dow Jones Industrial Average indicating a 120 point opening bell decline and those linked to the S&P 500 priced for an 13 point pullback.
The Nasdaq Composite, which rebounded yesterday with a 1.7% surge amid a sharp pullback in Treasury yields, looks set for a modest 15 point gain.
Benchmark 10-year note yields slipped further in overnight trading, to 1.635%, while 2-year notes were marked at 0.145% ahead of a $60 billion auction later this morning that forms a key leg in the government's $328 billion in refunding that will take place throughout the week.
Investors will also be focused on the first dual appearance before Congress of Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell, who will speak to lawmakers on the fiscal and monetary impact of the $1.9 trillion American Rescue Act.
GameStop (GME) shares could also be active ahead of the video game retailer's fourth quarter earnings after the closing bell, while Microsoft (MSFT) was named by Bloomberg news as a potential suitor for social media messaging platform Discord, which could worth as much as $7 billion.
Elsewhere, U.S. crude prices fell below $60 amid the new lockdown orders in Europe and a firmer U.S. dollar, with WTI futures for May delivery falling $2.60 to $58.96 per barrel. Brent contracts for the same month, which are more closely tied to global prices, fell $2.75 to $61.86 per barrel.
European stocks traded lower, as well, with Germany's DAX performance index falling 0.5% in the opening hours of trading, pulling the Stoxx 600 into a 0.45% decline for the session, while extended weakness in China stocks -- linked to new sanctions imposed by the U.S. and Europe over human rights abuses against Muslim Uighurs in Xinjiang -- dragged the region-wide MSCI ex-Japan index into a 0.65% decline heading into the final hours of trading.