Thursday June 9th

9-06-2016

Futures lower amid oil slide; bonds in focus

U.S. stock-index futures indicated a lower open Thursday, amid a pullback in oil prices from recent highs and further declines in benchmark yields. In oil markets, brent crude was off more than 1 percent near $51.90 a barrel while WTI was trading more than 1 percent lower below $51 a barrel. The 10-year German Bund yield was in focus as it edged closer to zero and threatened to join its Japanese counterpart with negative yields. Treasury yields held lower, with the 10-year yield around 1.67 percent, near its lowest of the year so far. The 2-year yield was last near 0.76 percent. The U.S. dollar index stabilized after a recent decline to trade about 0.3 percent higher. The euro was near $1.135 and the yen around 106.5 yen against the greenback. U.S. stocks closed higher Wednesday, helped by WTI's highest settle since July at $51.23 a barrel and the U.S. dollar index's intraday drop to its lowest since May 6. The Dow Jones industrial average closed above the psychologically key 18,000 level for the first time since April and the S&P 500 ended at its highest since July. Traders also eyed comments from European Central Bank President Mario Draghi, who warned about the "lasting economic consequences" of years of weak output. "A too-slow return of output to potential is far from innocuous," he said in a speech. "On the contrary, it has lasting economic consequences, since it can ultimately lead to potential being eroded as well." He also said structural reforms in the euro zone would be key and needed to be implemented without delay. On the data front, weekly jobless claims fell to a seasonally adjusted 264,000. Wholesale trade data is due to be released at 10:00 a.m. An auction of $12 billion in 30-year bonds will also take place. On the earnings front, JM Smucker and Vail Resorts reported. H&R Block and Mattress Firm are set to report after the bell. The pan European Stoxx 600 Index was down 0.9 percent. In Asia, Japan's Nikkei closed 0.97 percent lower on Thursday. Markets in China were closed on Thursday. Gold eased from three-week highs on Thursday as a recovery in the dollar prompted some buyers to cash in gains after the previous day's sharp rally, though the outlook for U.S. interest rates offered support. The metal surged 1.5 percent on Wednesday after below-consensus U.S. payrolls data and dovish comments from Janet Yellen, chair of the U.S. Federal Reserve, dampened expectations of an imminent rate hike. Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. Spot gold reached its highest since May 18 in early trade, at $1,266.01 an ounce, before easing to $1,258.66, down 0.3 percent. U.S. gold futures for June delivery were down 70 cents at $1,261.60.