U.S. futures gain as Treasuries extend declines

U.S. equity futures climbed on Monday along with stocks in Europe as negotiators from Russia and Ukraine prepare for a new round of talks. A global bond rout deepened as traders anticipated Federal Reserve policy tightening to curb inflation.

U.S. equity futures climbed on Monday along with stocks in Europe as negotiators from Russia and Ukraine prepare for a new round of talks. A global bond rout deepened as traders anticipated Federal Reserve policy tightening to curb inflation.

Contracts on both the S&P 500 and Nasdaq 100 signaled that a measure of calm may return to U.S. markets after last week’s volatile trading. The 10-year Treasury yield climbed to its highest level since July 2019, while the five-year measure crested 2 per cent for the first time in three years. The Fed on Wednesday is expected to begin a cycle of rate increases, starting with a 25 basis-points move. Price pressures were already high before the Ukraine war and the isolation of resource-rich Russia upended commodity flows.

The Stoxx Europe 600 index jumped more than 1 per cent, with carmakers leading the advance following a “confident” outlook from Volkswagen AG. Basic-resources and energy stocks fell as crude oil declined along with natural gas. Tech investor Prosus NV slumped more than 10 per cent after a continued selloff in Chinese technology shares amid regulatory headwinds and concerns about Beijing’s relationship with Russia.

Investors are parsing efforts at diplomacy as Russia continues its war in Ukraine, as well as comments from a U.S. official that Moscow asked China for military assistance. Rising Treasury yields and a 12 per cent drop in global stocks this year signal worries that receding stimulus and higher costs for energy, grains and metals may throttle the world economic recovery.