S&P 500 futures fall on debt ceiling as Treasuries rise with yen

U.S. stock futures fell, signaling the market will extend a weekly decline, amid concern a political impasse over the federal budget will hurt the economy. Treasuries rose while the yen strengthened and energy led commodities lower.

Standard & Poor’s 500 Index futures (CME:SPZ13) fell 0.4% at 9:05 a.m. in New York while the rate on 10-year Treasury notes lost two basis points to 2.63%. The yen appreciated against all but one of its 16 major peers as Japan’s finance minister damped speculation the government will cut the corporate tax rate. The pound advanced 0.3% against the dollar as Bank of England Governor Mark Carney told a U.K. newspaper he does not support increasing asset purchases. Italian bonds and European shares slid following a debt auction.

U.S. House Speaker John Boehner’s plan to avert a shutdown by shifting to a debt-ceiling fight ran into opposition from some Republicans in another setback for efforts to keep the U.S. government operating after Sept. 30. Britain, France, the U.S., Russia and China agreed on a resolution requiring Syria to give up its chemical weapons, which the full Security Council of the United Nations will discuss today.

“People are just headline watching in terms of the debt ceiling,” said Nick Xanders, an equity strategist at BTIG Ltd. in London. Investors will “have to wait and see what happens with the votes in the next couple days and whether or not the lights go out in a couple of weeks,” he said.

U.S. Markets

The U.S. Senate plans to vote today on an emergency budget to prevent a shutdown of the federal government when the new financial year starts on Tuesday. The bill must then return to the House.

Among stocks moving in pre-market U.S. trading, J.C. Penney Co. slid 8.3% after the retailer began selling 84 million shares to raise cash. Nektar Therapeutics tumbled 20% after a study of the slow-release painkiller NKTR-181 failed to meet its goals. Nike Inc. surged 7.1% as fiscal first-quarter profit topped analysts’ estimates.

The U.S. Bloomberg Dollar Index slipped 0.2%. The pound rose 0.3% to $1.6095, after climbing to $1.6163 on Sept. 18, its highest level since Jan. 11.

“Given the recovery has strengthened and broadened, I don’t see a case for quantitative easing and I have not supported it,” Carney said, according to the Yorkshire Post.

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