S&P 500 Futures: On defensive above 4,200 amid steady Treasury yields, Jerome Powell eyed

  • S&P 500 Futures fail to extend Wall Street’s gains amid cautious sentiment, lack of data/events.
  • Powell’s prepared remarks repeat the old tunes, US inflation expectations improved on Monday.
  • US bond traders take a breather following the rebound from four-month low.

S&P 500 Futures remain mildly bid around 4,217, up 0.08% intraday, during early Tuesday. The risk barometer jumped the most in three months the previous day after the market sentiment improved on Fed’s efforts to tame rate-hike and tapering concerns.

However, a light calendar in Asia and market fears ahead of Fed Chairman Jerome Powell’s testimony probe bulls. In doing so, the investors fail to stretch the previous day’s upbeat performance of the US equities.

Dow Jones jumped the most since March whereas S&P 500 and Nasdaq also posted gains on Monday as comments from the policymakers, including prepared remarks of Chairman Powell, keep rejecting immediate risks to the Fed’s easy-money policies. Even so, hawkish rhetoric by New York Fed President John C. Williams and Dallas Fed President Robert Kaplan seem to test the risk appetite of late.

Read: Wall Street Close: Dow jumps the most in three months as bulls battle the Fed

Also on the negative side could be doubts over the US-China phase one deal, spotted by Bloomberg. The news piece cites Beijing’s inability to import the agreed American goods to indicate risks to the much-awaited trade deal among the world’s largest two economies. Additionally, the covid struggle of the UK and Japan add to the upside filters for the markets.

It’s worth noting that the US Treasury yields remain subdued even as the inflation expectations rebound from a three-month low, following the bond bears’ return from a four-month low of yields.

Moving on, second-tier data from the US may entertain traders ahead of Powell’s testimony. While most market players are optimistic over the Fed Chair’s defensive tactics to favor the current monetary policy, failures to offer convincing answers to the jury may renew the risk-off mood and recall the US dollar buyers.

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