S&P500 Futures recover, yields extend pullback from multi-year high as traders brace for PMI amid China hopes


  • Market sentiment improves amid expectations of better US-China ties, mixed concerns about Fed.
  • S&P500 Futures revere pullback from weekly top, yields retreat from multi-year high.
  • Likely talks between the US and China, expectations of more stimulus from Beijing allow traders to position for PMI.
  • US housing data, Fed talks and qualitative factors are extra catalysts to watch for fresh impulse.

The risk appetite improves on early Wednesday as the headlines surrounding the US-China ties join the market’s positioning for the preliminary readings of the August month Purchasing Managers Indexes (PMIs) for major economies. While portraying the mood, S&P500 Futures rise 0.20% intraday to near 4,410 as it reverses the previous day’s pullback from the weekly top. Furthermore, the US 10-year Treasury bond yields dropped two basis points (bps) to 4.31% while extending the previous day’s U-turn from the highest level since 2007.

Late Tuesday, the US Commerce Department mentioned Commerce Secretary Gina Raimondo’s meeting with the Chinese Ambassador, as well as the Vice Foreign Minister, Xie Feng, scheduled for the next week. The news states that the policymakers had a ‘productive discussion’ ahead of her trip to China. Earlier in the week, the US Commerce Department’s Bureau of Industry and Security (BIS) also removed 27 Chinese entities from its Unverified List, removing sanctions from those entities and flagging hopes of improving US-China ties.

Alternatively, mixed concerns about the economic recovery in China and the recently firmer US Dollar cap the market’s optimism, especially amid pre-data anxiety.

That said, US Dollar Index (DXY) retreats from the 10-week high marked Friday, around 103.50 at the latest, as improvements in the US Existing Home Sales for July and the Richmond Fed Manufacturing Index for August join firmer Treasury bond yields. That said, the US Existing Home Sales came in as -2.2% MoM versus -3.3% prior while the Richmond Fed Manufacturing Index matched -7.0 market forecast compared to -9.0% previous readings.

It should be noted that Federal Reserve Bank of Richmond President Thomas Barkin emphasized achieving the 2.0% inflation target while challenging the US recession concerns by stating, per Reuters, “If the US were to have a recession, it would likely be a ‘less-severe’ one,” which in turn prods the risk-on mood. The policymaker also added, “Fed must be open to the possibility that the economy will begin to reaccelerate rather than slow, with potential implications for the US central bank's inflation fight.”

Elsewhere, Australia's PMIs and New Zealand’s quarterly Retail Sales came in downbeat but the Japanese PMIs for August improves and joins the softer yields to favor the Yen (JPY).

Looking ahead, the preliminary readings of the US PMIs for August and Existing Home Sales for July will join the updates about the aforementioned risk catalysts to entertain the traders. Talking about the consensus, the US S&P Global Manufacturing PMI is likely to improve to 49.3 from 49.0 but the Services counterpart may edge lower to 52.2 versus 52.3 prior. As a result, the S&P Global Composite PMI is expected to reprint the 52.0 number and can test the Aussie pair buyers. Above all, Friday’s Jackson Hole Symposium is the key event that can offer clear directions.

Also read: Forex Today: USD not ready for a correction, Global PMIs next

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays below 1.0700 after upbeat US PMI data

EUR/USD stays below 1.0700 after upbeat US PMI data

EUR/USD stays on the back foot and trades in negative territory below 1.0700 as the US Dollar benefits from upbeat data in the American session. S&P Global reported that the economic activity in the US private sector continued to expand at a robust pace in June.

EUR/USD News

GBP/USD drops to fresh multi-week low below 1.2650

GBP/USD drops to fresh multi-week low below 1.2650

GBP/USD remains under bearish pressure and trades at its lowest level since mid-May below 1.2650. The stronger-than-forecast Manufacturing and Services PMI data from the US helps the USD hold its ground and causes the pair to stretch lower.

GBP/USD News

Gold drops below $2,340 as US yields rebound

Gold drops below $2,340 as US yields rebound

Gold loses its traction and trades deep in the red below $2,340 in the second half of the day on Friday. The benchmark 10-year US Treasury bond yield pushes higher following the upbeat PMI data from the US, weighing on XAU/USD.

Gold News

Bitcoin retraces to crucial support

Bitcoin retraces to crucial support

Bitcoin price encounters resistance at weekly highs before retracing to seek support at a crucial level, while Ethereum and Ripple align closely with Bitcoin's movements, gearing up to surpass resistance barriers and embark on upward rallies.

Read more

Week ahead – US PCE inflation the highlight of a relatively light agenda

Week ahead – US PCE inflation the highlight of a relatively light agenda

Core PCE inflation to test bets of two Fed rate cuts in 2024. Yen awaits BoJ Summary of Opinions, Tokyo CPI. Canadian CPI data also enters the spotlight.

Read more

Forex MAJORS

Cryptocurrencies

Signatures