US Treasury yields, S&P 500 Futures pare intraday losses as Biden-Putin summit eyed

Market sentiment improves as Russia-Ukraine headlines flash positives, inflation woes keep buyers in check.
Fed policymakers recently stepped back from strong rate hikes.
US warns over imminent Ukraine invasion by Moscow as Russia and Belarus extend military drills, Putin-Biden summit chattered of late.
Treasury yields remain pressured after snapping three-week uptrend, stock futures track Wall Street losses amid a sluggish start to the week.

Anil Panchal FXStreet

Although markets are far from optimistic, headlines from France recently improved risk appetite during a sluggish Asian session on Monday.

While portraying the mood, the US 10-year Treasury yields stay depressed around 1.92% whereas the S&P 500 Futures reverse early Asian session losses to +0.05% while taking rounds to 4,340-45 of late.

Having witnessed a downbeat start to the week, market sentiment improves on headlines from AFP suggesting that French President Emanuel Macron proposed a summit of US President Joe Biden and his Russian counterpart Vladimir Putin. The news also mentioned that both the parties have accepted the “principle” of a summit.

However, CNN news questions the market’s optimism by saying, “The White House has not confirmed the prospect of Biden/Putin summit.”

It’s worth noting that, a Reuters’ witness earlier mentioned that an explosion was heard in the center of the rebel-held city of Donetsk in eastern Ukraine. That said, the US continues to suggest an imminent Russian military attack on Ukraine even as Moscow rejects the claims. Even so, a diplomatic meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov is the ray of hope to witness de-escalation of the geopolitical fears.

Elsewhere, Federal Reserve Bank of Chicago President and FOMC member Charles Evans said on Friday that the current Fed policy had been "wrong-footed" in the face of high inflation, but may not need to become restrictive. On the other hand, New York Federal Reserve Bank President John Williams and the No. 2 official on the Fed’s policy-setting panel mentioned, "I don’t see any compelling argument to taking a big step at the beginning."

Although the yields fail to justify risk-off mood, maybe due to hopes of softer Fed rate hikes, the gold prices manage to cheer the rush to risk-safety and renew an eight-month high above $1,900 at the latest.

Looking forward, US Core PCE inflation data and updates over Russia-Ukraine will be crucial for market sentiment.

Read: US inflation expectations drop to two-week low, focus on Core PCE Price Index

Author

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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