- US 10-year Treasury yields struggle to defend fist daily positive in six.
- Stock futures pare early gains, Asia-Pacific equities trade mixed.
- Pre-Fed caution gains major attention, Omicron, IMF’s growth forecasts and trade/geopolitical fears add to market’s risk-off mood.
Global markets remain lackluster during Wednesday’s Asian session as investors await the US Federal Reserve’s (Fed) verdict.
Also weighing on the risk appetite are the Omicron woes, geopolitical risks emanating from Russia and downbeat economic forecasts by the International Monetary Fund (IMF).
While portraying the mood, the US 10-year Treasury yields seesaw around 1.78%, being barely positive after declining for the last five days. On the same line is the S&P 500 Futures that remain indecisive around 4,350 whereas the Asia-Pacific stocks traded mixed following the rating giant Moody’s comments.
The South African covid variant pushed policymakers at the IMF to downgrade global growth forecasts as No.2 official Gita Gopinath said, “We project global growth this year at 4.4%, 0.5 percentage point lower than previously forecast, mainly because of downgrades for the United States and China,” per Reuters.
Also weighing on the market sentiment are the US, the UK and European Union’s (EU) readiness to levy economic sanctions on Russia if it invades Ukraine. That said, the latest updates suggest receding fears of an imminent war between Moscow and Kyiv.
Furthermore, the recent passage of the America COMPETES Act offers extra support to the gold prices amid fears of escalating US-China tussles.
It’s worth observing that the Fed hawks ignored softer US CB Consumer Confidence and Richmond Fed Manufacturing Index figures on firmer US inflation expectations, per the 10-year, breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, which in turn favored gold buyers. The inflation gauge rose for the third consecutive day at the latest after declining to the lowest since September on January 20.
Moving on, market sentiment may remain sluggish ahead of the Federal Open Market Committee (FOMC) meeting. Should policymakers fail to meet the market’s hawkish hopes, the disappointment will be responded with more force.
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