16.09.201305:58:19UTC+00U.S. futures celebrates Summers retreat as treasuries, Stocks bolster

U.S. stock and Treasury futures stepped up, with the Standard & Poor’s 500 contract surging the most in almost a month, and the dollar pulled back after Lawrence Summers retreat from the race to be the next Federal Reserve chairman.

S&P 500 futures marched 1 percent up as of 10:34 a.m. in Singapore, heading for the largest gain since Aug. 22. Ten-year U.S. bond contracts leaped the most in six weeks, crawling up one point, or $10 per $1,000 face amount, to 124 17/32, based on electronic transaction on the Chicago Board of Trade. The greenback slouched versus all of its Group of 10 currency counterparts, giving up 1 percent versus the Australian dollar.

Tapering Expectations

The S&P 500 rose 2 percent last week to close within 1.3 percent of its record high. Treasuries trading is closed in Japan today for a holiday. They are scheduled to trade as usual in the U.K. and the U.S., according to the New York-based Securities Industry and Financial Markets Association’s website.

Bonds, Dollar

The dollar has depreciated 1.2 percent in the past week, the biggest drop among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. Treasuries lost 0.4 percent in September, heading for a fifth straight monthly decline, according to the Bloomberg U.S. Treasury Bond Index.

Obama’s Favorite

Summers had been the president’s favorite for the job. Twenty U.S. senators, 19 Democrats and one independent, signed a letter of support for Yellen in July, who would be the first female Fed chairman if nominated and confirmed.

Former Treasury Secretary Timothy Geithner, sometimes mentioned as another alternative, doesn’t want the Fed post and has made that clear since leaving the Treasury early this year, according to a person familiar with his thinking, who asked for anonymity to discuss private conversations.

“Summers withdrawing helps to crystalize the outlook and it does put the market on a more dovish stance going forward,” Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, which oversees about $1.5 trillion, said by telephone. “Obviously we have other names, but the reality seems a bit more support for Yellen after Summers’ exit from the race.”

A poll of investors, analysts and traders who are Bloomberg subscribers conducted Sept. 10 showed Yellen was viewed more favorably. Sixty percent of respondents had a positive view of Yellen, compared with 37 percent for Summers.

Options traders have scaled back hedges against potential stock losses. The CBOE Volatility Index (VIX), the gauge of S&P 500 options prices known as the VIX, last week capped an 11 percent five-day drop, its biggest weekly slide since July 5.