S&P 500 Futures trace Wall Street’s clues, US Treasury yields stay pressured amid lackluster markets

Market sentiment remains mixed as traders brace for next week’s Fed meeting after mixed PMIs.
Cautious mood ahead of US Q4 GDP joins blackout periods at Fed, ECB to restrict market moves.
S&P 500 Futures extends pullback from six-week high, US Treasury bond yields stay defensive.
Light calendar, mixed clues keep traders guessing ahead of US GDP, FOMC.

Anil Panchal FXStreet

Risk appetite wanes during Wednesday’s sluggish Asian session as traders try to gauge the recent activity data ahead of the next week's all-important monetary policy meetings, not to forget Thursday’s US Gross Domestic Product (GDP) for the fourth quarter (Q4). It’s worth noting that the mixed earnings and China’s absence from the markets, as well as cautious mood ahead of the European Central Bank (ECB) and the Federal Reserve (Fed) monetary policy meetings, seem to challenge the momentum traders of late.

While portraying the mood, S&P 500 Futures drop half a percent to 4,012, extending the previous day’s U-turn from the 1.5-month high. Further, the US 10-year Treasury bond yields drop 1.5 basis points (bps) to 3.45% while the two-year counterpart posted the biggest daily loss in a week around the 4.15% level.

It’s worth noting that Wall Street closed mixed on Tuesday as a technical glitch joined the mixed earnings report. “Fourth quarter earnings season is in full swing, with 72 of the companies in the S&P 500 having reported. Of those, 65% have beaten consensus, just a hair below the 66% long-term average, according to Refinitiv,” said Reuters.

Among the key equity headlines were the underwhelming forward guidance from 3M and General Electric, as well as the US Justice Department’s lawsuit against Google.

Elsewhere, the US Dollar Index (DXY) remains pressured as the US activity data for January remained below 50.0 level and suggested contraction despite improving a bit. The same help the prices of Gold and Oil to remain firmer.

It should be observed that the early-day release of quarterly inflation data from New Zealand and Australia entertained traders with the AUD/USD leading the G10 bulls around 0.7090 by the press time.

Looking forward, the first readings of the US fourth-quarter (Q4) Gross Domestic Product (GDP), up for publishing on Thursday, will be crucial to watch for immediate directions. The reason appears logical due to the next week’s Federal Open Market Committee (FOMC) meeting, as well as the talks of the US recession. Forecasts suggest the world’s biggest economy eases with 2.8% annualized growth.

Also read: US Gross Domestic Product Preview: Three reasons to expect a US Dollar-boosting outcome

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 consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.