Yields, S&P 500 Futures hold onto recovery moves amid Fed, China concerns


  • Market sentiment remains cautiously optimistic amid a quiet session.
  • Powell’s 50 bps rate hike, downbeat US data join hopes of faster recovery from covid to underpin positive mood.
  • PBOC holds MLF rate unchanged ahead of the key data dump from China.
  • US Retail Sales, risk catalysts eyed for fresh impulse.

Global traders keep the previous day’s upbeat mood, despite failing to bolster the bullish bias, amid a quiet Asian session on Monday. The market sentiment remains mildly positive as the latest Fedspeak and the US data join positive headlines from China to keep buyers hopeful. However, geopolitical fears from Europe remain on the table to test the optimism.

While portraying the mood, the S&P 500 Futures print mild gains after the Wall Street benchmarks rallied the previous day. Further, the US 10-year Treasury yields also extend Friday’s recovery moves, up 1.5 basis points (bps) around 2.95% by the press time.

That said, downbeat prints of the US Michigan Consumer Sentiment Index for May, backed by Fed Chair Jerome Powell’s repetition of 50 bps rate hikes concerns, triggered the market’s rebound the previous day.

The positive mood also took clues from the downbeat US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data. That said, the inflation precursor dropped to the lowest levels since late February, before portraying a corrective pullback to 2.69%.

Furthermore, hopes of easing the virus spread in China spread optimism in Asia as the latest covid update from Reuters suggests softer numbers from Shanghai. “Chinese financial hub Shanghai reported 869 new local asymptomatic coronavirus cases for May 15, down from 1,203 a day earlier. Confirmed symptomatic cases fell to 69, from 166 the previous day, data released on Monday showed,” said the news.

It’s worth noting that the People’s Bank of China’s (PBOC) refrains from any change in the Medium-Term Lending Facility (MLF) rate, for 1-year it's around 2.85% at the latest, also keeps the traders hopeful.

Meanwhile, worsening geopolitical concerns in Ukraine joins the European Union’s (EU) plan for more sanctions on Russia to weigh on sentiment. Also challenging the mood are broad fears over inflation and economic growth moving forward, mainly due to the covid resurgence in China and the Russia-Ukraine tussles, not to forget tighter monetary policies.

Given the light calendar on Monday, except for China’s Retail Sales and Industrial Production (IP) data, market players may extend Friday’s moves with eyes on qualitative catalysts. That said, the traders’ rush for clues to confirm the global economic challenges surrounding inflation also highlights this week’s US Retail Sales data for April as the key factor to follow.

Also read: Macro and Prices: Sentiment swings between inflation and recession

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD struggles to retain 1.1500 as USD gains traction

EUR/USD struggles to retain 1.1500 as USD gains traction

EUR/USD hovers around the 1.1500 level in the American session on Friday. The US Dollar surges despite dovish comments from Fed Governor Waller, supporting a rate cut as soon as July. The mood sours as investors weigh Middle East developments. 

GBP/USD dives below 1.3500 after weak UK data, resurgent USD

GBP/USD dives below 1.3500 after weak UK data, resurgent USD

GBP/USD turned red for the day and approaches the 1.3450 area as the week comes to an end. Earlier in the day, the UK reported weak Retail Sales figures, although the ongoing slump seems related to renewed risk aversion fueling safe-haven US Dollar demand. 

 

Gold surges above $3,3360 as fears kick in

Gold surges above $3,3360 as fears kick in

Gold gathers near-term momentum and trades near $3,370 ahead of the weekly close, as risk sentiment took a turn to the south. Following a positive start, Wall Street turned south. Middle East tensions and massive back-and-forth missile exchanges between Iran and Israel seem to be behind the ongoing run to safety.

 

Ripple Price Prediction: How tokenized treasuries could accelerate XRP to $10 by end-2025

Ripple Price Prediction: How tokenized treasuries could accelerate XRP to $10 by end-2025

Ondo Finance launched tokenized treasuries on the XRP Ledger in June, paving the way for seamless institutional adoption. The market capitalization of tokenized treasuries has grown to $5.9 billion despite market uncertainty over US tariffs.

Weekly focus: War and risk of escalation weigh on market sentiment

Weekly focus: War and risk of escalation weigh on market sentiment

The war between Israel and Iran and the risk of further escalation weighed on markets this week. Equity markets largely traded in red and US treasury yields slid lower. That said, markets were by no means in full risk-off sentiment.

The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025