- US 10-year Treasury yields keep bounce from one-week low, steady of late.
- S&P 500 Futures, Asia-Pacific stocks print losses after volatile Wall Street.
- Pre-Fed caution, Russia-Ukraine story keeps risk appetite weak.
- US CB Consumer Confidence may entertain traders ahead of tomorrow’s FOMC.
Be it fears of faster monetary policy consolidation or the Russia-Ukraine tussles, global markets remain risk-off during early Tuesday.
While portraying the mood, the US 10-year Treasury yields stay firmer around 1.78%, rising for the first time in the last five days. Further, US stock futures and Asia-Pacific shares remain on the back foot.
The bond coupons began the week on a firmer note, taking Wall Street benchmarks to the south, before declining to the lowest levels in seven days during late Monday. The corrective pullback also helped US equities to end Monday’s North American session on a positive side.
The recovery moves could be linked to the downbeat prints of the US Markit PMIs for January. “The Markit Flash US Composite PMI dropped sharply in January to 50.8 (from 57.0), its lowest read since July 2020. Both the manufacturing and service sectors fell sharply supply chain disruptions and labor shortages continue. Input price inflation is slowing but output prices are still rising sharply as firms look to recover more of the price increases they have encountered over the past year,” said ANZ analysts.
Though, upbeat prints of US inflation expectations, per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, seem to bolster the Fed’s rate hike concerns ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting.
Escalating the war of words over the geopolitical tussles between Russia and Ukraine also underpinned the risk aversion at the start of the key week. The US, Europe and the North Atlantic Treaty Organization (NATO) push Russia towards a ceasefire amid reports that Moscow is up for a battle with Ukraine. As per the latest updates from the UK, leaders agreed that if Russia continues its intervention into Ukraine, allies must respond quickly, including through a package of sanctions.
It’s worth noting that US Treasury Secretary Janet Yellen accepted the same and praised Fed efforts, which in turn strengthened bullish bias over the FOMC.
Although markets keep eyes on the Fed, today’s US CB Consumer Confidence for January, prior 115.8, will offer intermediate clues to investors.
Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar
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