S&P 500 Futures print six-day downtrend, Treasury bond yields lick their wounds amid mixed sentiment


  • Market sentiment remains dicey amid pre-Fed blackout, absence of major data/events.
  • Mixed updates surrounding China, Russia adds filters to the trading moves.
  • US Treasury bond yields marked widest inversion in 40 years amid recession fears.
  • Second-tier data, risk catalysts may entertain intraday traders.

Global traders remained cross-minded during early Thursday as a pause in the US Treasury bond rally joined mixed headlines surrounding China and Russia. Also likely to have probed the market moves could be the unimpressive prints of data from Australia and Japan.

While portraying the mood, the S&P 500 Futures drops 0.40% intraday to 3,921, poking a three-week low during a six-day downtrend. Further, the US 10-year Treasury yields print the first daily gains in three at the lowest levels since mid-September, up four basis points (bps) near 3.45% by the press time.

It’s worth noting that the benchmark 10-year Treasury bond yields dropped to the lowest since early September by losing 3.30% on Wednesday. On the same line, the two-year counterpart fell 2.54% amid the rush for risk safety. With this, the US Treasury bond yield curve, the difference between the long-dated and the short-term bond yields, inverted the most in over forty years and highlighted the recession woes.

Elsewhere, Russian President Vladimir Putin’s threat of using nuclear weapons contrasts the latest comments from German Chancellor Olaf Scholz, suggesting easing the risks of Moscow using nuclear weapons. Furthermore, China’s gradual easing of the Zero-Covid policy appears as a passive reopening and struggles to impress the bulls.

Talking about the data, Japan’s final readings of the third quarter (Q3) Gross Domestic Product (GDP) came in better than initial forecasts as the QoQ figures improved to -0.2% versus -0.3% while the GDP Annualized came in -0.8% versus -1.1% expected and -1.2% prior.

On the other hand, Australian Trade Balance for October improved to 12,217M versus 1,155M expected and 12,444 prior. Further details suggest that the Imports and Exports dropped 1.0% versus expectations of rising by 2.0% and 1.0% in that order. Additionally, the quarterly Bulletin from the Reserve Bank of Australia (RBA) needed to provide clear directions as it highlights the importance of education while praising the economic transition due to the easing of Covid-linked restrictions.

It should be noted that the policy-driven blackout of the Fed officials ahead of next week’s Federal Open Market Committee (FOMC) restricts the market’s overall momentum even if the bears are in control. However, the same fails to please the US Dollar buyers and helps traditional safe-haven assets like the Yen and Gold. That said, crude oil prices also witness downside pressure despite supply challenges.

Looking forward, US Initial Jobless Claims, expected to rise by 230K versus 225K prior during the week ended on December 02, may entertain the traders amid a light calendar.

Also read: Forex Today: US Dollar weakness set to continue

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