Treasurys Remain Steady Ahead of FOMC Meeting, Stocks Decline Amid Tech Selloff

The technology sector continued to weigh down stock markets in today’s trading session, with the Nasdaq shedding an additional 1% on the day, it’s largest two-day loss since Brexit.  Much of the drop-off has been attributed to declines in Apple (-3%), Facebook (-1%), Amazon (-1.3%), Google (-1.2%), and Microsoft (-0.7%), companies who combined account for nearly 30% of the Nasdaq.  The S&P 500 (-0.25%) and DJIA (-0.3%) also posted modest losses on the day, helped out by increases in energy shares whose prices benefitted from a 1% gain in oil.  A barrel of West Texas Intermediate jumped back above $46 today after it was reported that Saudi Arabia would be limiting its crude allocations to Asia to roughly 300,000 barrels per day in July while volumes to the US would be reduced by 35%.  US Treasurys held within a tight range throughout the day, with the yield on the 10-year note remaining near 2.21%.  Of particular interest to markets this week will be the announcement of the FOMC policy decision at the conclusion of its June meeting on Wednesday, followed by a press conference hosted by Fed Chair Janet Yellen.   Fed fund futures are currently pricing a rate hike this week as a near certainty, but more important will be the forward guidance provided by the committee afterwards.  In the political arena, Attorney General Jeff Sessions is set to publicly testify in front of the Senate Intelligence Committee tomorrow afternoon, where questions will be asked ranging from his involvement in the Comey firing to his communications surrounding the Russian investigation.     

In France, recently elected President Emmanuel Macron further solidified his control over future French policy decisions, as his centrist party commanded the majority vote in the first round of legislative elections on Sunday.  His centrist party, “Republic on the Move”, won 32.3% of the initial vote, which featured a record-low turnout that was considered a waving of the white flag from the previously empowered mainstream parties.  The final round of voting is scheduled to take place next Sunday, and Macron’s party, along with its centrist ally MoDem, are projected to win between 415-455 of the 577 seats available in the lower house of parliament.  Armed with an overwhelming majority in the National Assembly, Macron is expected to push through a significant labor-market overhaul, with an outline of the plan anticipated to be ready by this September.  The euro rose 0.2% on the day to $1.122/EUR.