US Treasury yields dwindle, S&P 500 Futures ignore Wall Street gains amid inflation anxiety

Global markets portray a typical pre-data cautious mood during early Thursday as traders await the US headline inflation figures.

That said, the US 10-year Treasury yields pause the previous day’s pullback from the highest levels since July 2019, hovering around 1.930-925% of late. Also portraying the cautious sentiment in the market, as well as challenging gold buyers, is the steady S&P 500 Futures despite Wall Street’s upbeat performance on tech-rally and strong earnings, as well as mixed moves of the Asia-Pacific stocks.

Read: Mid-afternoon market update: Dow jumps 350 points; US ecology shares Spike higher

Comments from the White House could be cited as the key catalyst to weigh on recent risk appetite while Fedspeak favoring March rate-hike and the US-China trade tensions also exert downside pressure on the market sentiment.

The White House (WH) conveyed expectations of a higher YoY inflation figure while also saying, “Its irrelevant month on month number will continue trending lower the rest of the year.” Following that, WH Economic Adviser Brian Deese said that he sees reason to think that factors boosting inflation will moderate over time.

Moving on, Cleveland Fed President Loretta Mester supported the March rate hike while Atlanta Federal Reserve President Raphael Bostic told CNBC on Wednesday he is hopeful that they will start to see a decline in inflation. Fed’s Bostic also said, "Leaning toward the need for a fourth interest rate increase in 2022."

Elsewhere, China’s inability to match Phase 1 deal targets seems to push US authorities towards discussing sanctions should the tension escalate. Recently, Reuters cited officials from the largest US Chamber of Commerce, the country’s business lobbying group to mention the trade war fears. “The US President Joe Biden’s administration is contemplating a new China tariff investigation if current talks fail to persuade Beijing to follow through on its promised purchases of American goods, energy and services,” said the news.

It should be noted that the fears of Russia’s invasion of Ukraine also test optimist even as the US Consumer Price Index (CPI) for January gains the most attention.

Given the higher hopes from the US CPI for January, expected 7.3% YoY versus 7.0% prior, fears of disappointment and a shaky move portray risk-off mood in the markets. Though, prices of gold seem to cheer softer USD while WTI crude oil remains on the back foot at the latest.

Read: US Consumer Price Index January Preview: Is this inflation different?