Stock Futures Drop as Market Selloff Continues Amid High Bond Yields

Weak Treasury auctions have added upward pressure on yields ahead of key inflation data tomorrow when the personal-consumption expenditures price index is released. It’s the Federal Reserve’s preferred measure of inflation and could have a bearing in the central banks future rate policy.

U.S. stock markets were headed for a fall early on Thursday with equities struggling amid high bond yields. Weak Treasury auctions have added upward pressure on yields ahead of key inflation data tomorrow.

Dow Jones Industrial Average futures were down 337 points, or 0.9%. S&P 500 futures were falling 0.5% and Nasdaq 100 futures were also declining 0.5%.

“The latest selloff has been driven by a range of factors, but bonds took a particular hit after a weak US Treasury auction yesterday, along with mounting concern about inflationary pressures,” wrote Deutsche Bank analyst Henry Allen in a research note on Thursday.

The yield on the benchmark 10-year Treasury stood at 4.597% early Thursday, ticking down from the previous day. However, it is still hovering close to its highest level in a month.

On Friday, the Federal Reserve’s favored inflation gauge will be released. Economists forecast that the personal-consumption expenditures price index rose 2.7% in April from a year earlier.

India’s Sensex closed 0.8% lower at 73885.60, tracking Wall Street losses.

There has been a broad selloff in equities in Asia following hawkish Fed comments, signaling higher chances of delayed rate cuts, UOB’s Global Economics and Markets Research team wrote in a note.

Among decliners, Tata Steel shed 5.7%, Titan lost 3.2% and Tech Mahindra was 3.15% lower. Among advancers, ICICI Bank rose 1.1%, Axis Bank gained 1.0% and HDFC Bank was 0.45% higher.