S&P 500 Futures print mild gains, US Treasury yields bounce off monthly low ahead of Fed Minutes

  • Global markets remain sluggish ahead of the key Fed Minutes as Asian news probes risk-on mood.
  • China’s covid conditions, North Korea’s missiles join pre-RBNZ anxiety to portray pessimism in APAC.
  • Hawkish ECB policymakers, downbeat US data and repeated Fedspeak weighed on the yields the previous day.
  • Wall Street closed mixed as traders struggle for fresh clues ahead of FOMC Minutes.

Market sentiment dwindles during early Wednesday as headlines from the Asia-Pacific regions test the risk appetite. Also challenging the optimism is the cautious mood ahead of the key data/events. While portraying the mood, the S&P 500 Futures pare the early-day gains around 3,950, up 0.20% intraday, whereas the US 10-year Treasury yields stay defensive around one-month low, at 2.76% by the press time.

North Korea’s firing of three missiles and Japan’s dislike for the same join the market’s anxiety ahead of today’s Fed Minutes and seem to also weigh on the market’s optimism.

On the same line could be the news updating China’s covid lockdowns and its negative impacts on the world’s second-largest economy. “Beijing has continued its quarantine to end its month-old COVID outbreak, while in Shanghai, authorities plan to keep most restrictions in place this month, before a more complete lifting of the two-month-old lockdown from June 1,” said Bloomberg.

On Tuesday, downbeat prints of the US housing data and repeated Fedspeak, in contrast to the hawkish comments from the ECB, exerted downside pressure on the US Treasury yields and the US Dollar. However, the Wall Street benchmarks closed mixed after the corrective pullback during the late hours.

Moving on, traders will pay close attention to the Federal Open Market Committee (FOMC) Minutes as a 50 bps rate hike move garners less attention of late. Also important is the US Durable Goods Orders for April, expected 0.6% versus 1.1% prior.

Read: FOMC May Minutes Preview: Will the Fed have to sell MBS?

In addition to the aforementioned catalysts, risks emanating from the Russia-Ukraine crisis and fears of global economic growth, mainly due to China and inflation woes elsewhere, will also be important for short-term market directions.

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