S&P 500 Futures portray pre-Fed market consolidation, Japan’s holiday chains yields

S&P 500 Futures extend bounce off yearly low, US Treasury yields stay near multi-year high.
Off in Japan, China adds strength to the pre-Fed trading lull.
Fed’s preference for orderly markets, geopolitical and covid-led challenges test hawks amid mostly priced-in outcomes.
US ISM Services PMI, ADP Employment Change will be important to watch as well.

Anil Panchal FXStreet

Global markets remain jittery, mildly positive though, as traders remain cautious ahead of the key Federal Open Market Committee (FOMC) meeting outcome, up for release late Wednesday. In addition to the pre-Fed anxiety, holidays in China and Japan also restrict the market moves.

Even so, the S&P 500 Futures print mild gains while marching towards 4,200, up for the third consecutive day. However, the US 10-year Treasury yields remain inactive at around a 3.0% rate as an off in Tokyo limits bond moves in Asia.

Underpinning the latest optimism could be a pullback in the US bond yields from the highest levels since December 2018. More importantly, expectations that the US Federal Reserve (Fed) will match the widely anticipated, as well as priced in, 50 basis points (bps) of a rate hike and provide hints of balance sheet normalization also back the latest consolidation.

While considering the same, the Australia and New Zealand Banking Group (ANZ) said, “Given the weight the FOMC puts on forward guidance and a preference for orderly market moves, particularly given current geopolitics and the slowdown in China, such a surprise seems unlikely.”

It’s worth noting that the US dollar bears the burden of the market’s indecision as it stays ground around its 20-year top, recently sidelined near 103.50. This ignores the strong JOLTS Job Openings and Factory Orders for March data published the previous day. Also, escalating geopolitical fears and covid woes would have also underpinned the US dollar strength but could not.

Looking forward, the Fed’s battle to tame the inflation will be crucial to watch but the monthly print of US ISM Services PMI and ADP Employment Change will also be important for clear directions. Additionally, updates from Russia and China are likely to help in making trade decisions as well.

Read: Fed May Preview: 'Less hawkish' is the new dovish

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD: The 0.7000 level holds the downside…for now

AUD/USD has clinched its fourth consecutive daily pullback on Thursday, coming closer to the key 0.7000 region while breaking below the critical 200-day SMA at the same time. The Aussie’s decline comes on the back of further gains in the Greenback in a context of rising yields and Fed rate hike bets.

USD/JPY keeps the red near 158.00 as Japanese Yen firms up

USD/JPY retreats from three-week highs and holds losses near 158.00 in the Asian session on Thursday. Surging Japanese bond yields lift the Yen amid looming intervention risks, while the US Dollar preserves overnight gains to a two-month high amid hawkish Fed bets and elevated US bond yields.

Gold bounces off lows, still below $4,300

Gold builds on Wednesday’s retracement, briefly slipping back below $4,250 per troy ounce to attempt a lacklustre rebound afterwards. The better tone in the US Dollar, rising US Treasury yields and expectation of extra rate hikes by the Fed continue to weigh on the precious metal in the latter part of Thursday’s NA session.

XRP is flashing three bullish signals heading into a historically weak October

XRP (XRP) is still flashing 3 bullish signals across its holders, derivatives, and ETF data. These signals come as the token gave back part of its September gains on Thursday. The token traded near $1.50 at press time, down about 6.3% over 24 hours, according to BeInCrypto Markets data. The pullback still leaves XRP up over 15.6% on the week, a gain that tracks a broader market rally.

Advanced economies: From one example of resilience to another

History tends to repeat itself in advanced economies. Once again, growth ultimately fell short of expectations by only a small margin in the first half of 2026, despite the conflict in Iran. As early as 2025, the impact of tariffs was less severe than feared.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.