Yields poke weekly low, stock futures print mild gains as traders await Fed’s Powell

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  • Market sentiment remains divided amid central banks’ moves, growth fears.
  • US Treasury yields remain pressured for third consecutive day.
  • S&P 500 Futures, Euro Stoxx 50 Futures consolidate recent losses.
  • Fed’s bi-annual monetary policy report, Powell’s speech will be crucial for fresh directions.

Global markets remain dicey as central banks flex muscles to battle inflation. However, the aggressiveness in the Western policymakers’ efforts seems to underpin the recession fears, especially when the supply chain woes join covid and geopolitical catalysts.

While portraying the mood, the US 10-year Treasury yields remain pressured around 3.25%, down for the third consecutive day, whereas the S&P 500 Futures dribble around an 18-month low, up 0.50% intraday to 3,688 by the press time. Further, Euro Stoxx 50 Futures also copy the US moves and rise 0.58%, around 3,442 at the latest.

US Treasury bond yields stay depressed for the third consecutive day, despite defending the weekly bottom marked the previous day.

Downbeat US data seem to weigh on the US bond coupons of late. On Thursday, US Building Permits and Housing Starts eased in May to 1.695M and 1.549M respectively while the Initial Jobless Claims 4-week average inched up to 218.5K versus 215K expected during the period ended on June 10. Further, Philadelphia Fed Manufacturing Survey printed a negative figure of -3.3 for June, the first such contraction since May 2020.

It’s worth noting that aggressive momentary policy actions from the Swiss National Bank (SNB) and the Fed, not to forget the steady rate hike from the Bank of England (BOE), in contrast with the Asian central banks like the Bank of Japan (BOJ) and the People’s Bank of China (PBOC). The imbalance in the monetary policy actions and fears that tighter monetary policy in the west could weigh on growth especially when the economy is fragile seems to weigh on the market’s sentiment.

On the positive, the World Trade Organization’s (WTO) efforts to facilitate easy trade deals tried to tame the pessimism. Reuters came out with the news from the WTO as it said, “Representatives of the 164 countries cheered after the package was passed before Director-General Ngozi Okonjo-Iweala addressed them early on Friday.”

Moving on, the US Industrial Production for May, expected at 0.4% versus 1.1% prior, will be the first to entertain traders ahead of the Fed’s Monetary Policy Report and Powell’s speech.