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Stock futures rose more than 1% on Tuesday and the dollar and bond yields fell on hopes that central banks may get less aggressive on rate-hiking plans.

The Federal Reserve, alongside most of its developed-economy peers, in the past several months has been hiking interest rates aggressively to combat inflation running at multi-decade highs, and the consequent surge in bond yields has triggered a bear market across equity benchmarks.

Now some investors are hoping the peak of this monetary tightening cycle may be in sight.

"It seems like traders have brushed away concerns about the Fed increasing the interest rate aggressively and how that will cut into the economic growth of the [U.S.] economy," said Avatrade.

"I believe that this is an important sign that despite the Fed officials' strongly hawkish rhetoric, many investors no longer believe the Fed could continue tightening at the current speed. That's a good ingredient for a global market rebound," Swissquote Bank said.

Overseas indexes rallied. Japan's Nikkei 225 jumped 3% while the pan-continental Stoxx Europe 600 rose 2.1%.

Stocks to Watch:

Cathie Wood's ARK funds said Monday it had snapped up Tesla stock. It comes after the EV maker's shares tumbled following a deliveries miss in the third quarter.

Wood's ARK Innovation exchange-traded fund purchased 108,380 Tesla shares, while the ARK Next Generation Internet ETF bought 23,833 shares, according to a trade notification.

It's the ARK Invest CEO's first purchase of Tesla stock since mid-June, according to data compiled by Bloomberg.

Read more here.

Forex:

The dollar extended its recent correction lower as Treasury yields declined due to growing expectations that the end may be in sight for U.S. rate increases.

"The pullback for U.S. yields and dollar appears to reflect in part that market participants have become more comfortable that the Federal Reserve is moving closer to the end of their rate hike cycle," MUFG Bank said.

Market expectations for the Fed's peak rate in 2023 have fallen to around 4.39% from 4.75%, MUFG said.

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Sterling extended its advance after the U.K. government reversed plans to scrap the top rate of income tax, but ING said the currency remains vulnerable due to a lack of political credibility and a still-elevated risk of a rating downgrade.

"The pound continues to face very significant downside risks as the large twin deficit, low market confidence in the new government and a grim outlook for Europe heading into winter all point to the unsustainability of 1.10+ levels in GBP/USD," ING said.

Bonds:

The 10-year Treasury yield has probably peaked for now, based on technical charts, UOB Global Economics & Markets Research said.

The yield's recent high, together with its sharp drop, led to a bearish "outside reversal" bar on the charts. On Monday, the yield broke below support on 2-month-old rising trendline, while the daily moving average convergence divergence indicator crossed into negative territory, UOB said.

The yield has ample room to extend its retreat and a downside break of the 21-day exponential moving average, which is at 3.557%, and the June high of 3.500% wouldn't be surprising, UOB added.

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Citi said that following the recent sell-off, 10-year gilts offer a 96-basis-point pickup over Treasurys for U.S. investors when FX-hedged for three months, adding that this is the largest pickup in at least seven years and the best return for U.S. investors within major developed markets except for eurozone government bonds.

The yield pickup in the 30-year maturity segment is around 70bps, still relatively attractive, Citi said . However, for investors over a one-year horizon, the FX-hedging cost associated with gilts becomes highly punitive for dollar-denominated investors.

Energy:

Oil prices extended their modest gains in London, as investors awaited Wednesday's OPEC meeting and likely output cut.

"Emboldened by the thought of a convincing OPEC backstop, a soggy dollar and a softer rate profile helping growth recover, oil prices continued to march higher...ahead of tomorrow's anticipated OPEC production cut," SPI Asset Management said.

Metals:

Base metals pushed higher in early European trading on improving macroeconomic sentiment across risk assets.

"The macro mood feels better this morning and a few market indicators are now flashing green," Peak Trading Research said.

Employment data on Friday will further help determine how risk assets move, Peak added.

Other Comment:

UBS said commodity demand could slow over the coming six months as consumers in developed markets are squeezed by high energy costs and rising rates while in China, pandemic-related restrictions are likely to stifle growth and the property market should remain weak.

The outlook for commodity supply is more mixed, it said, and tipped rising production of copper, iron ore and platinum group metals but expected aluminum, zinc, gas and coal markets to continue facing disruptions.

For investors, thermal coal and gas should be top picks because supply disruptions are likely to support prices for two-to-three years, UBS said.

"We also remain constructive on lithium."


TODAY'S TOP HEADLINES


Samsung Kicks Advanced-Chipmaking Race Into High Gear With Road Map

Samsung Electronics Co. unveiled targets for making its most advanced chips, detailing for the first time how its production road map would compare with that of Taiwan Semiconductor Manufacturing Co. in their closely watched technology race.

On Monday, Samsung's contract chipmaking unit said it would start manufacturing chips on the 2-nanometer production process in 2025 and the 1.4-nanometer production process in 2027. That advances from its current 3-nanometer chip production that began in June and which the company called an industry first.


Cathie Wood's ARK Snaps Up Tesla After Stock Plunges on Deliveries Miss

Cathie Wood's ARK funds said Monday it had snapped up Tesla stock. It comes after the EV maker's shares tumbled following a deliveries miss in the third quarter.

Wood's ARK Innovation exchange-traded fund (ticker: ARKK) purchased 108,380 Tesla shares, while the ARK Next Generation Internet ETF (ARKW) bought 23,833 shares, according to a trade notification.


Poshmark to Sell Itself for Less Than Half Its IPO Price to Korea's Naver

Poshmark Inc. has agreed to sell itself in a deal that values the social shopping marketplace at less than half the price where it went public in early 2021.

South Korean internet giant Naver Corp. is paying $17.90 a share in cash for Poshmark, the companies said. Poshmark priced its initial public offering at $42 a share in January 2021 and the shares more than doubled on their first day. The stock has slumped since and closed Monday at $15.57.


Bed Bath & Beyond Creditors Organize Ahead of Bond Talks

Bed Bath & Beyond Inc.'s bondholders are organizing, looking to protect their investments in the struggling retailer as it looks for ways to ease its debt during a slump in sales, according to people with knowledge of the matter.

Financing adviser Perella Weinberg Partners is working with holders of Bed Bath & Beyond's unsecured notes due in 2024 ahead of debt talks expected to be held with the company, the people said.


Trump Files Defamation Lawsuit Against CNN, Seeking $475 Million

Former President Donald Trump filed a defamation lawsuit Monday against CNN, accusing the network of engaging in a smear campaign against him in the lead-up to the 2024 presidential race.

Mr. Trump's suit, filed in a federal court in southern Florida, alleged CNN has sought to use its influence with viewers to spread false claims about him for the purpose of defeating him politically. He accused CNN of associating him with Adolf Hitler and portraying him as a Russian lackey and a racist. The network, he alleged, has been escalating these efforts recently in the expectation that he may run for president again in 2024.


U.S. Seeks to Further Restrict Cutting-Edge Chip Exports to China

The Biden administration is preparing new export controls on semiconductors and the machines to make them, the latest push in its effort to deny China the ability to make the fastest, most cutting-edge circuitry possible, according to people familiar with the situation.

The administration in recent weeks has already placed new restrictions on some U.S. exports of chips used for artificial-intelligence calculations and manufacturing equipment used to make some of the most powerful number-crunching chips.


RBA Slows Pace of Rate Increases as Household Budgets Tighten

SYDNEY-The Reserve Bank of Australia slowed the pace of recent interest-rate increases at a policy meeting Tuesday, citing a deterioration in the global economic outlook and growing concern about tightening household budgets.

The RBA raised the official cash rate by 25 basis points to 2.60%, surprising most economists who expected a further 50-basis-point increase.


Glynn's Take: RBA Slows Record Pace of Rate Increases as Pain Grows

SYDNEY-Having delivered a shock and awe campaign of massive interest rate hikes since May, the Reserve Bank of Australia chose to slow the pace of policy tightening at its board meeting Tuesday, in part to ease growing pressure on the country's highly indebted housing sector.

Interest rates have risen at a record speed since May, and given the backdrop of a rapid deterioration in the global economic outlook, the case to go slower was made crystal clear.


Crypto Could Threaten Financial System, Federal Risk Panel Warns

WASHINGTON-Risks tied to cryptocurrencies could grow rapidly and eventually threaten the broader financial system, a panel of senior U.S. officials warned Monday, calling for tougher oversight of digital assets.

(MORE TO FOLLOW) Dow Jones Newswires

10-04-22 0542ET