US futures point to a below par opening for Wall Street. Derivatives on the Dow Jones, S&P500 and Nasdaq were trading 0.2% to 0.4% lower after Friday’s choppy close.
Last week closed with decent gains, on the back of the prospect of an easing of interest rate tightening by the Federal Reserve.
The November job report, released on Friday, highlighted a higher than expected increase in payrolls (263,000) and an acceleration in pressure on wages. However, it did not shift its expectation of a borrowing price tweak by 50 basis points at its December 13-14 meeting. Rather, the data reinforces the view that the central bank will keep rates tight for longer in order to effectively fight inflation.
The US services ISM is expected this afternoon from the macroeconomic agenda. The indicator is expected to drop slightly, but still above the 50-point threshold that separates expansion and contraction. Over the next few days, focus on Michigan’s trade balance (Wednesday), producer prices and confidence (Friday).
The prospect of a slowdown in monetary tightening by the Fed triggered a weakening of the dollar, allowing the exchange rate against the euro to climb back to 1.057. On bonds, the US Treasury yield increased to 3.51% and the two-year yield to 4.31%, both below the peaks following the publication of the job report.
In the pre-market Tesla falls (-2%), in the wake of rumors about a possible voluntary reduction in production in the Shanghai factory starting this week. The move, which signals a slowdown in Chinese demand, would affect about 20% of production at full capacity.