Yields stay pressured with stock futures as markets brace for Fed
|- US 10-year Treasury yields struggle to defend fist daily positive in six.
- Stock futures pare early gains, Asia-Pacific equities trade mixed.
- Pre-Fed caution gains major attention, Omicron, IMF’s growth forecasts and trade/geopolitical fears add to market’s risk-off mood.
Global markets remain lackluster during Wednesday’s Asian session as investors await the US Federal Reserve’s (Fed) verdict.
Also weighing on the risk appetite are the Omicron woes, geopolitical risks emanating from Russia and downbeat economic forecasts by the International Monetary Fund (IMF).
While portraying the mood, the US 10-year Treasury yields seesaw around 1.78%, being barely positive after declining for the last five days. On the same line is the S&P 500 Futures that remain indecisive around 4,350 whereas the Asia-Pacific stocks traded mixed following the rating giant Moody’s comments.
Read: Moody's: The economic recovery will stabilize in Apac
The South African covid variant pushed policymakers at the IMF to downgrade global growth forecasts as No.2 official Gita Gopinath said, “We project global growth this year at 4.4%, 0.5 percentage point lower than previously forecast, mainly because of downgrades for the United States and China,” per Reuters.
Also weighing on the market sentiment are the US, the UK and European Union’s (EU) readiness to levy economic sanctions on Russia if it invades Ukraine. That said, the latest updates suggest receding fears of an imminent war between Moscow and Kyiv.
Furthermore, the recent passage of the America COMPETES Act offers extra support to the gold prices amid fears of escalating US-China tussles.
It’s worth observing that the Fed hawks ignored softer US CB Consumer Confidence and Richmond Fed Manufacturing Index figures on firmer US inflation expectations, per the 10-year, breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, which in turn favored gold buyers. The inflation gauge rose for the third consecutive day at the latest after declining to the lowest since September on January 20.
Moving on, market sentiment may remain sluggish ahead of the Federal Open Market Committee (FOMC) meeting. Should policymakers fail to meet the market’s hawkish hopes, the disappointment will be responded with more force.
Read: Federal Reserve Interest Rate Decision Preview: Inflation, Omicron and equities
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.