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US Treasury yields fade biggest jump in seven weeks, S&P 500 Futures stay mildly bid

  • US 10-year Treasury yields struggle around weekly top after US bank holiday.
  • S&P 500 Futures extend the previous day’s rebound, commodities, Antipodeans trade mixed.
  • Fed rate hike concerns remain on the table amid a light calendar.
  • Evergrande, China headlines eyed ahead of US Michigan Consumer Sentiment figures.

Global traders pare the post-US inflation moves as American bond markets open after a Veterans Day holiday during early Friday.

The benchmark US 10-year Treasury yields jumped the most in seven weeks on Wednesday after the US Consumer Price Index (CPI) rallied to a 31-year high, per details for October. The bond coupon seesaw around 1.57% of late, up 1.2 basis points (bps). With this, the key Treasury yields stay pressured near the weekly high.

Read: S&P 500 stabilises above 4650, set to post modest gains amid subdued trading conditions

Sluggish bond yields help the US stock futures to keep the previous day’s mild gains. That being said, the S&P 500 Futures rise 0.30% intraday to 4,655 at the latest. It should be noted, however, that the commodities and Asian stocks trade mixed amid a light calendar and a lack of major catalysts of late. Even so, the return of the US bond traders seems to offer a good start to the US dollar and weighs on the Antipodeans.

US Federal Reserve (Fed) stays on the way to rate hike even if the latest Fed speak tried to defend the easy money. The reasons could be linked to higher US inflation, firmer jobs market and hopes of extra stimulus that could fuel the world’s largest economy.

While the US Fed is likely to announce a rate hike next year, the European Central Bank (ECB) policymakers recently pulled back their economic forecasts and tried to justify the view that the inflation pressure in the bloc is temporary, requiring no change to the current rate. This joins the latest data line from Australia and the UK to enable some of the major central banks to defend easy money policies.

Hence, the rush towards the US bond selling, which in turn propels the Treasury yields, is likely to prevail for a bit longer. The same could join the growing concerns over China’s economic growth, mainly due to the credit crisis for real-estate companies and power-cut problems, to favor the Treasuries and the US dollar’s safe-haven demand. Recently, chatters were gathering momentum that Beijing is up for easing the lending restrictions on the property sector. Adding to the challenges for market sentiment are the Sino-American tussles over the phase 1 deal, Vietnam and Hong Kong.

Looking forward, market talks over the Fed rate hike will get fresh hints from the US Michigan Consumer Sentiment for November, expected 72.4 versus 71.7 prior, which in turn should be watched carefully for clearer direction.

Read: US Michigan Consumer Sentiment Index Preview: Inflation’s dangerous impact

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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