U.S. equities eked out a small gain Monday while Treasuries fell as investors weighed what it would take to finally reverse the Federal Reserve’s path on rates after a survey of loan demand showed signs of credit tightening.

The S&P 500 ended the day little changed after wavering between gains and losses in a subdued session Monday. The gauge had jumped 1.9 per cent Friday to halt its longest losing streak since February. The tech-heavy Nasdaq 100 advanced 0.2 per cent as AI-capable chipmakers Advanced Micro Devices Inc. and Nvidia Corp. rose alongside Google-parent Alphabet Inc.

A gauge of the dollar erased losses after the Fed’s Senior Loan Officer Opinion Survey signaled that the credit market was tightening slightly while business loan demand was weakening. The yield on the policy sensitive two-year Treasury rose to 4.01 per cent. Syndicate desks brace for as much as US$35 billion pf corporate bond sales volume this week while Apple Inc. kicked off a $5.25 billion sale.

Paypal Holdings slid 4 per cent in postmarket trading after second quarter outlook fell short of some analysts’ estimates. Shares of Premier Inc. were halted after the health-care consulting firm said it was exploring options including a sale; the stock had fallen over 20 per cent since cutting its forecast last week. 

US stocks have been rangebound since the beginning of April as better-than-feared corporate earnings offset concerns around an economic slowdown and the health of regional banks. PacWest Bancorp rose 3.6 per cent while lending peers mostly traded lower with the KBW Regional Banking Index slumping 2.8 per cent. 

“U.S. banking sector stress and a looming debt ceiling deadline elevate near-term recession risk,” Marko Kolanovic, JPMorgan Chase & Co.’s chief strategist said. “Absent a disruptive event, we expect a U.S. recession dynamic will take hold gradually and won’t create space for pre-emptive Fed easing this year.”

Yet, swaps traders remain optimistic the Fed is prepared to pause as contracts suggest interest-rate cuts will start as early as the central bank’s July meeting, with at least two quarter-point cuts by year-end.

“Persistently strong economic data suggests that such a significant pivot in Federal Reserve sentiment is unlikely,” said Seema Shah, chief global strategist at Principal Asset Management. “The conditions necessary for the Fed to pivot and cut rates are dismal, requiring a desperately struggling economy or a financial crisis. Investors: be careful what you wish for.”

Consumer-inflation data Wednesday may provide further clues on the Fed’s rates path as well set the tone for equities.

“Traders will be looking to see if this week’s inflation numbers will be able to push stocks out of their recent consolidation. The S&P 500 hasn’t had a weekly gain or loss of at least 1 per cent since March—its longest stretch in nearly two years,” Chris Larkin, managing director of trading and investing at E*Trade Financial said.


Tech stocks have been trading at a 49 per cent premium to the rest of the S&P 500, according to a Goldman Sachs analysis. Sector bulls argue that valuation premium is supported by earnings growth outlook and a macro backdrop of slowing GDP growth and declining interest rates.

“However, if the economic outlook improves and rates rise, further valuation expansion will be challenging, and more cyclical stocks will likely outperform,” the bank’s strategists led by David Kostin wrote. “If the economy enters a recession, the popularity of mega-cap tech in hedge fund long portfolios leaves the stocks vulnerable.”


The rout in U.S. bank shares has the S&P 500 financials index on the verge of falling back below its 2007 peak.

Meanwhile, Treasury Secretary Janet Yellen sees “simply no good options” for solving the debt limit stalemate in Washington without Congress raising the cap. She even cautioned that resorting to the 14th Amendment would provoke a constitutional crisis.

“The deficit ceiling is a political football and since 2024 is an election year, both sides are seeking to score political points,” Louis Navellier, chief investment officer of Navellier & Associates, said. “However, the Biden Administration has the most to lose, so it will be interesting if there will be any caps on federal spending. As long as Treasury bond yields do not panic, investors should not panic either.”

Elsewhere in markets, oil gained as investors assessed a complex outlook for global demand after a period of volatile trading. Bitcoin slipped below $28,000, reaching session lows after the SLOOS data.

Key events this week:

  • U.S. President Joe Biden scheduled to meet with congressional leaders on debt limit, Tuesday
  • New York Fed President John Williams speaks to Economic Club of New York, Tuesday
  • U.S. CPI, Wednesday
  • China PPI, CPI, Thursday
  • U.K. BOE rate decision, industrial production, GDP, Thursday
  • U.S. PPI, initial jobless claims, Thursday
  • Group of Seven finance minister and central bank governors meet in Japan, Thursday
  • U.S. University of Michigan consumer sentiment, Friday
  • Fed Governor Philip Jefferson and St. Louis Fed President James Bullard participate in panel discussion on monetary policy at Stanford University, Friday.

Some of the main moves in markets:


  • The S&P 500 was little changed as of 4 p.m. New York time
  • The Nasdaq 100 rose 0.2 per cent
  • The Dow Jones Industrial Average fell 0.2 per cent
  • The MSCI World index rose 0.2 per cent


  • The Bloomberg Dollar Spot Index was little changed
  • The euro fell 0.2 per cent to $1.1002
  • The British pound fell 0.2 per cent to $1.2616
  • The Japanese yen fell 0.3 per cent to 135.14 per dollar


  • Bitcoin fell 5.5 per cent to $27,352.7
  • Ether fell 4.7 per cent to $1,830.04


  • The yield on 10-year Treasuries advanced eight basis points to 3.51 per cent
  • Germany’s 10-year yield advanced three basis points to 2.32 per cent
  • Britain’s 10-year yield advanced 13 basis points to 3.78 per cent


  • West Texas Intermediate crude rose 2.1 per cent to $72.84 a barrel
  • Gold futures rose 0.2 per cent to $2,029 an ounce