S&P 500 Futures drop towards 3,800 as reflation fears return to the table ahead of Fed’s Powell

  • S&P 500 Futures struggle to keep 3,800 as risks dwindle in Asia.
  • UK budget, US stimulus progress in the Senate join statements from ECB policymakers to recall reflation fears.
  • Vaccine optimism, mixed data can’t entertain traders before Fed’s Powell, second-tier US job figures.

S&P 500 Futures trim early Asian losses, currently down 0.18% to 3,808, but remains pressured as traders look for fresh clues amid rising Treasury yields. Also challenging the mood could be a lack of major data/events ahead of a speech from Federal Reserve Chairman Jerome Powell, at 17:05 GMT.

With the UK budget and progress on the US covid relief bill promising more inflation of funds in the system, reflation fears jump back to the table on Wednesday. Also favoring the bond bears could be the ECB policymakers’ hints that the jump in the Treasury yields doesn’t have legs to worry about.

Also on the risk-negative side could be a cyberattack on Microsoft’s email server linked from China and a rumored plot for another attack on the US Capitol Hill on Thursday.

Elsewhere, US President Joe Biden and Australian Prime Minister Scott Morrison stay optimistic due to the latest vaccine deliveries while the RBNZ Governor Adrian Orr rejects the need to worry about the remit over policy push to housing.

On the calendar, Aussie Trade Balance crosses prior and market consensus whereas Retail Sales eased from initial forecasts in January. Further, South Korean GDP and Consumer Price Index data came in positive but failed to please the bulls.

Amid these plays, stocks in Asia-Pacific remain offered while the US 10-year Treasury yields rise 1.1 basis points to 1.48%.

Looking forward, investors will keep their eyes on Fed’s Powell in search of clues relating to the reflation fears, which if materialized can weigh on equities and commodities afterward.

Read: Wall Street Close: US stocks drop as rising yields weigh on Tech/growth names

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