US pre-open: Futures mostly positive as Treasury yields invert

Wall Street futures were pointing to a positive open ahead of the bell on Monday as traders continued to mull over the fact that Treasury yields inverted late last week.

As of 1230 BST, Dow Jones futures were up 0.02%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.16% and 0.37% firmer, respectively.

The Dow closed 139.92 points higher on Friday to end the first session of Q2 in the green after investors thumbed over March's all-important nonfarm payrolls report.

Bond yields were again in focus prior to the open after an often-cited recession indicator was triggered on Thursday when the two-year and 10-year Treasury yields inverted for the first time since 2019, while the five-year note yield also traded above its 30-year counterpart.

The latest developments in the Ukraine-Russia conflict were also drawing an amount of investor attention in pre-market after German Chancellor Olaf Scholz said Western nations would impose additional sanctions on Moscow in a matter of days.

AvaTrade's Naeem Aslam said: "US and European futures are trading higher while traders are digesting the US NFP data released last week and the ongoing geopolitical tensions in Ukraine. Inflation and geopolitics remain at the top of the agenda for traders while they wait for this week's most important economic event, which is the FOMC minutes.

"Futures markets predict that the Fed will expand its firepower at its next meeting in early May, rising interest rates by 50 basis points, or half a percentage point. At its March meeting, the Fed raised rates for the first time by a quarter-point. Market players are also pricing nearly eight interest rate hikes for this year, and each one of them is to be 25 basis points. The US Treasury yields have risen at a breakneck pace as market expectations for interest rates have altered. For the first time since 2019, the two-year Treasury yield surpassed the 10-year yield or inverted. The market interprets this as a harbinger of an impending recession."

In the corporate space, Twitter shares surged 25% after news broke that Tesla CEO Elon Musk had taken a 9% stake in the social media giant, while Starbucks shares slipped after the coffee chain pulled its share repurchase programme.

On the macro front, February factory orders data will be published at 1500 BST.