- US T-bond yields steady around multi-day low, two-day downtrend probed.
- UK registers highest infections since January, Thailand marks record virus-led deaths.
- FOMC minutes reiterate cautious optimism, Fed’s Bostic cites Delta variant risk for US economy.
- ECB Special Meeting, US Jobless Claims to decorate calendar but risk catalysts are the key.
US bond bears test the recent two-day south-run around late February lows ahead of Thursday’s European session. That said, the 10-year coupon seesaws around 1.3200% following its drop to 1.2980, the lowest since February 19, the previous day.
The US Fed policymakers’ efforts to reject rate hike, backed by the latest FOMC minutes, as well as softer US data, earlier weighed on the Treasury yields. However, escalating concerns over the coronavirus (COVID-19) and its variants recently put a safe-haven bid under the bond rates.
Minutes of the latest Federal Open Market Committee (FOMC) unveiled that major policymakers remained concerned over the upside risk to inflation but “substantial further progress” needed to adjust monetary policy was seen. Hence, the week’s much-awaited event failed to offer anything new but teased US dollar bulls around the fresh three-month high after the release.
On the other hand, UK’s covid death toll eased recently, the virus infections have jumped to the highest in six months on Wednesday, above 32,000 level, whereas Thailand markets 75 death toll the all-time high. Additionally, Australia’s New South Wales (NSW) marks the record highest cases of 2021.
These challenges could well be identified by Atlanta Federal Reserve President Raphael Bostic as he said, per Reuters, “A new rise in coronavirus infections driven by the more virulent Delta variant could cause consumers to "pull back" and slow the US recovery.”
As the Treasury yields benefit from sober sentiment, US S&P 500 Futures step back from record top, down 0.20% by the press time.
Looking forward, market players will seek more clues of the strong US employment sector to closely observe the weekly Jobless Claims, which in turn could magnify the risk-off mood. Additionally, the ECB’s likely favor for easy money policies can help the US dollar and also back the bond bears.
Read: ECB Special Meeting Preview: Three potential EUR/USD movers to watch
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