S&P 500 Futures, US Treasury yields retreat amid pre-Fed anxiety, Ukraine, covid news eyed too
- S&P 500 Futures pare the biggest daily gain in a week, US Treasury yields ease from the highest levels since mid-2019s.
- Ukraine President Volodymyr Zelenskyy said, “talks were sounding more realistic,” but Russia’s Putin said Kyiv isn’t serious.
- China reports an easing in daily covid cases but figures stay near early pandemic levels.
- Fed is up for a 0.25% rate-hike, surprise lies in how Powell balances economic forecasts.
Global markets portray the typical pre-Fed nervousness with bond yields and stock futures both down during Wednesday’s Asian session. Adding to the traders’ woes are the mixed signals over the Ukraine-Russia tussles and China’s covid woes, despite the latest easing in daily virus infections.
While portraying the mood, S&P 500 Futures drop 0.25% to 4,250 whereas the US 10-year Treasury yields snap seven-day uptrend around the highest levels since June 2019, down 1.5 basis points (bps) to 2.145% at the latest.
Although Ukrainian President Volodymyr Zelenskyy said on Wednesday that the positions of Ukraine and Russia at peace talks were sounding more realistic, per Reuters, Russian President Vladimir Putin said Kyiv is not serious about finding a mutually acceptable solution. Recent updates suggest that Ukraine is likely to request more weaponry helps from the US, which will be approved by US President Joe Biden, as signaled by the Wall Street Journal (WSJ). Hence, an absence of major progress in the talks and mixed comments keep troubling traders when they read the Russia-Ukraine crisis.
Elsewhere, China reports 1,952 new coronavirus cases on March 15 versus 3,602 a day earlier, per Reuters. Even so, the daily virus numbers remain at the record top and challenge market sentiment.
On a different page, mixed US data and easing inflation expectations add challenges for the Fed policymakers during today’s Federal Open Market Committee (FOMC). That said, US Producer Price Index (PPI) matched YoY expectations of 10% growth whereas NY Empire State Manufacturing Index printed the biggest downside since May 2020. On the other hand, US inflation expectations from the record top, as signaled by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped from the second consecutive day after refreshing the record top.
To sum up, markets are likely to remain jittery but the traditional safe-havens may not benefit amid the pre-Fed caution. In addition to the Fed headlines and Chairman Jerome Powell’s speech, Ukraine-Russia updates, China COVID-19 news and the US Retail Sales for February, expected to ease to 0.4% from 3.8% prior, will also be important to watch for fresh impulse.
Read: Fed Interest Rate Decision Preview: Is history a guide?
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.
