A Wall Street street sign near the New York Stock Exchange (NYSE) in New York, US. Photographer: Michael Nagle/Bloomberg
NEW YORK/ LONDON: MSCI's global equities gauge fell slightly with U.S. Treasury yields on Monday as investors were shy about taking big bets as they waited for the week's busy schedule of U.S. economic data releases including the jobs report and retail sales as well as the latest inflation reading.
U.S. stocks ended Monday's session modestly lower after attempting a comeback earlier in the day following Friday's slump amid concerns about inflation and a bubble in artificial intelligence shares.
After digesting last week's update from the Federal Reserve, investors were turning their attention to this week's crop of economic data, which was delayed by the 43-day U.S. government shutdown, including the jobs report for November and retail sales data as well as the consumer price index (CPI) inflation report.
With traders already pricing in more rate cuts in 2026 compared with Fed estimates for just one, R. Burns McKinney, portfolio manager at NFJ Investment Group, said investors are hoping for a jobs report that is weak enough to support more easing.
"This is the kind of market where investors are kind of hoping for softness. We're right back to where bad news is good news. You just don't want the bad news to be terribly bad. You want mildly bad news," said McKinney.
New York Fed President John Williams said on Monday the U.S. central bank's interest rate cut last week leaves it in a good position to deal with what lies ahead, adding that he sees inflation moderating amid cooling in the job market.
Boston Fed President Susan Collins said she supported last week's rate cut due to a changing inflation outlook but that she "would want greater clarity about the inflation picture before adjusting policy further."
On Wall Street, the Dow Jones Industrial Average fell 41.49 points, or 0.09%, to 48,416.56, the S&P 500 fell 10.90 points, or 0.16%, to 6,816.51 and the Nasdaq Composite fell 137.76 points, or 0.59%, to 23,057.41.
"The two main drivers of the market all year long have been the easing interest rate cycle and AI momentum and over the past week those two are starting to come into a little bit of doubt," said Brian Mulberry, senior client portfolio manager, Zacks Investment Management.
He added with the year-end drawing closer, "you have a lot of people rebalancing their portfolio, taking risk off the table going into 2026, expecting more volatility. They're probably right."
MSCI's gauge of stocks across the globe fell 1.35 points, or 0.13%, to 1,007.53.
Earlier, the pan-European STOXX 600 index closed up 0.74% as investors in Europe returned to risk assets.
In U.S. Treasuries, yields dipped while investors waited for the last major economic releases for 2025.
The yield on benchmark U.S. 10-year notes fell 1.8 basis points to 4.178%, from 4.196% late on Friday while the 30-year bond yield fell 0.8 basis points to 4.8496%.
The 2-year note yield, which typically moves in step with Fed interest rate policy expectations, fell 2.3 basis points to 3.508%, from 3.531% late on Friday.
CENTRAL BANK DECISIONS LOOM
In currencies, the U.S. dollar fell against the yen and the euro and turned very slightly positive against the Swiss franc as traders prepared for central bank decisions and U.S. economic data.
Among the policy decisions due this week, the Bank of Japan is expected to hike rates by 25 basis points to 0.75%, while the Bank of England may make an equal-sized cut to 3.75%. The European Central Bank is expected to keep interest rates on hold, alongside Sweden's Riksbank and Norway's Norges Bank.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.11% to 98.30.
The euro was up 0.08% at $1.1749 while against the Japanese yen, the dollar weakened 0.39% to 155.21. Against the Swiss franc, the dollar strengthened 0.04% to 0.796.
In cryptocurrencies, bitcoin fell 2.78% to $86,005.01.
In energy markets, oil prices fell as investors balanced supply disruptions linked to escalating U.S.-Venezuelan tensions with oversupply concerns and the impact of a potential Russia-Ukraine peace deal.
U.S. crude settled down 1.08%, or 62 cents, at $56.82 a barrel and Brent fell to $60.56 per barrel, down 0.92%, or 56 cents on the day.
In precious metals, spot gold pared earlier gains on Monday as investors waited for U.S. jobs data while some were hoping for progress in critical talks between U.S. officials and Ukrainian President Volodymyr Zelenskiy aimed at ending the war with Russia.
Spot gold was up 0.02% at $4,302.84 an ounce while U.S. gold futures rose 0.09% to $4,303.90 an ounce. (Reporting by Sinéad Carew, Lawrence White, Gregor Stuart Hunter; Editing by Shri Navaratnam, Sam Holmes, Louise Heavens, Chizu Nomiyama, Nick Zieminski and Andrea Ricci)
