Yields stay pressured at 10-week low, S&P 500 Futures print mild gains amid sluggish markets

With a lack of clarity over the Fed’s next move and the fears of the South African variant of covid, market players remain divided during early Thursday.

While portraying the mood, the US 10-year Treasury yields lick their wounds at the lowest levels since early October, around 1.42% after refreshing multi-day bottom with 1.40% level the previous day. Alternatively, S&P 500 Futures print rises 0.35% to 4,523. Above all, DBC’s Volatility Index (VIX) stays firmer around the yearly top, around 7.13 at the latest.

Looking at the catalysts, Fed Chair’s Jerome Powell’s step back from the previously hawkish testimony could top all. Federal Reserve (Fed) Chairman Jerome Powell reiterated his inflation fears but also said he still believes inflation will come down “meaningfully” in the second half of 2022, during testimony against a Senate Commission. On the contrary, Federal Reserve Bank of New York President John C. Williams said, per New York Times, that Omicron could prolong supply and demand mismatches, causing some inflation pressures to last. Further, Cleveland Fed President Loretta Mester hints at speeding up the taper and likely rates in the next year, per Bloomberg.

Elsewhere, the first Omicron case in the US pushed President Joe Biden’s administration to extend the rules for wearing a mask in public transit.

It’s worth noting that Reuters recently ran a story citing more Chinese developers’ raising bond issues to mark the evidence Beijing is marginally easing liquidity strains on the cash-strapped sector.

Amid all these plays, the Organisation for Economic Co-operation and Development (OECD), suggesting the world GDP growing by 5.6% (previous 5.7%) in 2021, 4.5% in 2022, 3.2% in 2023, per Reuters.

Looking forward, a lack of major data/events may keep restricting the market moves but the yields and the US dollar may witness further pains should Friday’s US Nonfarm Payrolls (NFP) disappoint. That said, US ADP Employment Change and ISM Manufacturing PMI details for November ticked above market consensus of 525K and 61.0 respectively to 534K and 61.1 in that order.

Read: US nonfarm payrolls take center stage after Powell’s hawkishness