US futures retreated Friday after a dispute between Treasury Secretary Steven Mnuchin and the Federal Reserve over its emergency lending facilities. Asian stocks were little changed.
S&P 500 contracts slipped after the Trump administration and the Fed publicly disagreed over whether to extend the pandemic programs. Stocks edged lower in Australia and Japan and fluctuated in China. Treasuries, gold and the dollar were flat.
Technology stocks had led US benchmarks higher Thursday as investors weighed tougher virus curbs against the prospect of a vaccine rollout in the months ahead. Shares of firms seen as beneficiaries of lockdowns outperformed.
Mnuchin said lawmakers should redirect unspent stimulus funding, including money he’s pulling back from the Federal Reserve, to buoy the economy as the US waits for a coronavirus vaccine. Earlier, he’d requested the return of unused funds from the Fed’s emergency pandemic lending program, triggering pushback from the central bank, which said the programs served a vital role.
Meanwhile, President-elect Joe Biden assailed the Trump administration’s lack of cooperation on the presidential transition, saying it hindered his team’s ability to get up-to-date information on the pandemic.
Investor optimism over vaccine progress that lifted global stocks to an all-time high Monday has begun ebbing, amid a surge in virus cases and deadlock in the US over fresh fiscal relief. California imposed a curfew across the majority of the state, while both the South Korean and Japanese prime ministers urged vigilance to restrain the pathogen and Hong Kong’s health chief said the city has “probably entered into a new wave of cases.”
“Understanding how this spat between the Fed and Treasury ends up being resolved between now and December is absolutely critical,” Virginie Maisonneuve, chief executive of MGA Consulting, said on Bloomberg Television. Markets face a possible headwind at the prospect of a withdrawal of the liquidity that has sustained them so far this year, she said.
Elsewhere, the Bank of Thailand said it’s going to ease capital-outflow rules to cool the baht, though there was little immediate impact, with the currency strengthening for the first time in three days.
These are the main moves in markets:
- S&P 500 futures fell 0.5% at 2:20 p.m. in Tokyo. The S&P 500 Index rose 0.4%.
- Japan’s Topix Index dropped 0.1%.
- Australia’s S&P/ASX 200 Index fell 0.1%.
- Hang Seng Index gained 0.4%.
- Shanghai Composite Index gained 0.1%.
- The Bloomberg Dollar Spot Index was little changed.
- The euro gained 0.1% to $1.1883.
- The pound rose 0.1% to $1.3275.
- The yen was down 0.1% to 103.82 per dollar.
- The yield on 10-year Treasuries was at 0.83%.
- Australia’s 10-year bond yield was at 0.86%.
- West Texas Intermediate crude was steady, sitting just below $42.
- Gold stayed steady at $1,867 an ounce.