Futures muted as bond yields rise on rate jitters

U.S. stock index futures were largely flat on Thursday as government bond yields hovered near recent highs on worries that major central banks could keep raising interest rates.

The benchmark S&P 500 (.SPX) and the tech-heavy Nasdaq (.IXIC) closed lower on Wednesday, with megacap stocks leading declines as U.S. bond yields rose after the Bank of Canada (BoC) surprised markets with an interest rate hike.

Microsoft Corp (MSFT.O) slipped marginally in premarket trading, while Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) inched up after Wednesday’s declines.

The 2-year Treasury yield , which tends to move in step with short-term rate expectations, rose for a third day to 4.56%, as investors await the Federal Reserve meet next week.

“Our view remains that the Fed will pause in June, but leave the door open for a July hike, keeping it data dependent. Eventually we don’t think the Fed will hike in July,” Jefferies strategist Mohit Kumar said.

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