S&P 500 futures and Treasury yields drop on coronavirus concerns

The S&P 500 futures drop, suggesting continued risk aversion.
The US 10-year yield drops to nine-day lows.
Coronavirus concerns weigh over risk sentiment and boost demand for safe havens.

Omkar Godbole FXStreet Contributor

Both the US stock futures and the government bond yields are flashing red on renewed coronavirus concerns and fading prospects of additional fiscal stimulus deal.

At press time, the S&P 500 futures are down over 0.5% and boosting demand for haven currencies like the Japanese yen, while the US 10-year yield is hovering at a nine-day low of 0.761%. The benchmark yield hit a high of 0.872% on Oct. 23.

The risk sentiment has weakened this week with the acceleration of the second wave of coronavirus infections across Europe and the US. Some of the Eurozone nations are reportedly considering imposing the economically-painful lockdown restrictions to contain the virus. Though less severe than the ones implemented in April/May this year, these measures could derail the already fragile global economic recovery.

As such, investors are moving out of risk assets and into traditional safe havens like treasuries, causing yields to drop.

Additional bearish pressures for the yields look to be stemming from the fiscal impasse in the US. President Donald Trump acknowledged Tuesday that a coronavirus economic relief deal would likely come after the Nov. 3 election.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

Japanese Yen gains ground as traders await Fed rate decision

The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.

AUD/USD holds steady above 0.7050; looks to Fed for fresh impetus

AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.

Gold trades with mild negative bias amid some repositioning ahead of Fed rate decision

Gold edges lower during the Asian session, though it holds above the $4,300 mark as bulls opt to lighten their bets ahead of the highly anticipated FOMC policy decision. In the meantime, the commodity remains below the weekly swing high, touched on Monday, and a technically significant 200-day SMA.

DOGE near breakout, SHIB at its ceiling and PEPE leads meme coin recovery

Meme coins are approaching a key technical level, which could determine the next directional bias. Dogecoin struggles to overcome a major resistance level, and Shiba Inu recovery lost momentum near a crucial barrier. Meanwhile, Pepe extends its rally for a sixth straight day, raising the prospects of further upside if momentum persists.

The most important event will be the Fed meeting with Mr. Warsh now in charge

The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.