Yields test weekly low, S&P 500 Futures print mild gains amid coronavirus, Fed concerns

US 10-year Treasury yields grind lower following a three-day declines to weekly bottom.
S&P 500 Futures consolidate recent losses, Asia-Pacific shares trade mixed.
Omicron fears push ADB to cut developing Asia’s growth forecasts, Fed-linked fears stay on the table.
UK posts first variant-linked death, Australia’s NSW marks 50% jump in daily infections.

Anil Panchal FXStreet

Market’s mood remains mixed, mostly downbeat, as traders await the key central bank meetings and the Omicron fears escalate during early Tuesday.

While portraying the sentiment, the US 10-year Treasury yields seesaw around 1.42% whereas the S&P 500 Futures rise 0.15% at the latest. Furthermore, shares in Japan, Australia, New Zealand and China trade mixed by the press time.

The COVID-19 variant linked to South Africa, dubbed as Omicron, seems to exert the heaviest pressure on the risk appetite of late. Following the UK’s first Omicron-linked death and return of the mask mandate in California, Australia’s largest state, population-wise, New South Wales (NSW) reports the highest daily virus infections tally in more than two months.

The virus woes pushed the finance ministers and central bank governors of the Group of Seven (G7) nations to pledge more efforts to combat the pandemic. Additionally, the Asian Development Bank (ADB) cut growth forecasts for developing Asia due to the same reason, per Reuters.

In addition to the Omicron-led fears, anxiety over the US Federal Reserve’s (Fed) next move also weighs on the market sentiment. The reason could be linked to Friday’s US Consumer Price Index (CPI) for November and the US inflation expectations, portrayed by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, which slumped to the 10-week low on Monday.

Elsewhere, US Democrats’ push to have a $1.75 trillion worth of aid package by the end of 2021 join the geopolitical chatters surrounding Uyghur Bill and White House National Security Adviser Sullivan’s Israel visit to challenge the traders.

That said, the UK jobs report and US Producer Price Index (PPI) for November will decorate the calendar ahead of the key Fed meeting. Though, major attention will be given to the risk catalyst for clear directions.

Read: Fed Preview: Dollar hinges on 2022 rate hike dots, guide to trading the grand finale of 2021

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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