|

S&P 500 Futures, Treasury bond yields retreat on US debt ceiling woes, full market’s return

  • Market sentiment remains fragile as traders return from extended holiday.
  • US Treasury Depart renews fears of debt ceiling expiration, policymakers rush for quick solutions.
  • S&P 500 Futures print mild losses after reversing from three-month high, US Treasury bond yields pare week-start gains.
  • Relief over First Republic Bank issue, hawkish Fed bets and recovery in US inflation expectations underpin US Dollar.

Risk profile remains sluggish during early Tuesday, following a cautiously optimistic start of the key week. While tracing the main catalysts, talks surrounding US default and hawkish Fed bets, as well as about China growth and the Sino-American tension, gain major attention as most traders return from a long weekend.

S&P 500 Futures print mild losses after retreating from a three-month high, down 0.10% intraday near 4,182 by the press time. On the same line, the US 10-year and two-year Treasury bond yields retreat from a one-week high to 3.55% and 4.13% at the latest.

US Treasury Department renewed fears of US default by pulling forward the date of running out of funds to match obligations if the current debt ceiling isn’t altered, to June 01 from previously signaled July. Following that, Reuters came out with the news suggesting the US Senate Majority Leader Chuck Schumer’s push for an expedited process to consider a clean two-year suspension of the federal debt ceiling.

Further, chatters of US President Joe Biden’s call to four top US diplomats and arranging a meeting on May 09 also made rounds while US House of Representatives Speaker Kevin McCarthy mentioned that there is a bill sitting in the Senate as we speak that would put the risk of default to rest.

Elsewhere, a relief from the US First Republic Bank issue allowed traders to take a breather as the US regulators seized assets of the First Republic Bank and sold them to a new buyer, namely JP Morgan. “JPMorgan will pay $10.6 billion to the U.S. Federal Deposit Insurance Corp (FDIC) as part of the deal to take control of most of the San Francisco-based bank's assets and get access to First Republic's coveted wealthy client base,” said Reuters.

Also on the positive side are the latest statements from China Beige Book (CBB) suggesting that new data offer the first evidence of a truly robust 2023 recovery in the dragon nation, per analysts from CBB.

On the other hand, Axios came out with headlines suggesting the US allies’ preparations for the US-China war over Taiwan. Additionally, Friday’s upbeat US inflation clues via Core PCE Price Index join Monday’s mostly firmer US PMI data to underpin hawkish bias about the Federal Reserve (Fed) and weigh on the sentiment. On the same line are the US inflation expectations, as per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data.

Moving ahead, US Factory Orders for March, expected to rise by 0.8% MoM versus -0.7% prior, can offer immediate directions to traders. However, major attention will be given to Wednesday’s US Federal Reserve (Fed) monetary policy announcements and Friday’s jobs report for April for a clear guide.

Also read: Forex Today: US Dollar strengthens ahead of Fed

Author

Anil Panchal

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.

More from Anil Panchal
Share:

Editor's Picks

AUD/USD keeps the red near 0.6950 after weak Aussie jobs data

AUD/USD holds losses near 0.6950 on disappointing Australian jobs data, extending the previous day's retracement slide from the monthly high and hitting a fresh weekly low during Thursday’s Asian session. Meanwhile, declining US bond yields drag the US Dollar away from the April 2025 high, touched after Wednesday's hot US CPI, helping limit losses for the currency pair.

USD/JPY slides back below 158.00 as USD reverses post-CPI gains

USD/JPY extends the previous day's pullback from a three-week high, attracting follow-through selling and sliding below 158.00 during Thursday's Asian session. Traders remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. The US Dollar, meanwhile, reverses Wednesday's hot CPI-led gains to April 2025 highs as US bond yields retreat on China bond-buying talk, further pressuring the pair.

Gold sticks to gains below $4,150 on weak USD; bulls seem hesitant amid Fed hike bets

Gold clings to modest intraday gains through the early European session amid a broadly weaker US Dollar, snapping a three-day losing streak to a one-week low set on Wednesday. The initial aggressive market reaction to hot US consumer inflation figures faded quickly amid expectations that the Fed may not rush to raise interest rates immediately. This led to a further decline in US bond yields, prompting some follow-through USD profit-taking and supporting the non-yielding bullion.

Bitcoin, XRP analyst sentiment jumps as Solana bulls hit 91%: CryptoQuant

Analyst sentiment on Bitcoin, Ethereum, Solana, BNB and XRP has flipped bullish since July, as the top five cryptocurrencies recovered faster and more strongly than during the 2022-2023 market phase, according to CryptoQuant.

US Sept Retail Sales and PPI in focus along with corporate earnings
Asia market update: Bond traders ignore US CPI and focus on equity weakness and AI-credit concerns ahead of TSMC earnings; Kospi circuit breaker triggered for the first time since Jul; CHF and JPY rise on safe-haven demand; US Sept Retail Sales & PPI in focus along with corporate earnings. - Chinese shipping firms collapse amid capacity concerns.
Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?