The market sentiment remains lackluster and downbeat, even though there has been a slight improvement in the S&P 500 Futures. Concerns over a potential US default are fueling Treasury bond yields, adding to the risk profile.
The Federal Reserve (Fed) officials’ mixed comments and the unclear details of the FOMC Minutes further contribute to the challenging environment.
Nevertheless, the S&P 500 Futures have rebounded from a two-week low, halting a two-day downtrend. Currently, they are up 0.35% intraday at 4,138. However, the US 10-year and two-year Treasury bond yields continue to remain strong, reaching their highest levels since mid-March, hovering around 3.75% and 4.40% respectively.
It is worth noting that the US Dollar Index (DXY) has risen to a seven-week high at 104.00, while the prices of Gold and WTI crude oil remain low, with Gold near $1,975 and WTI crude oil at $74.00.
Due to the failure of US policymakers to reach a debt ceiling extension deal and the approaching long weekend for the House Representatives, concerns regarding a US default have prompted global rating agencies like Fitch and Moody’s to exercise caution regarding the US credit rating.
Moody’s recently issued a warning about the US outlook, while Fitch placed the US’ AAA rating on Rating Watch Negative status.
In terms of the Federal Reserve’s stance on inflation, Atlanta Fed President Raphael Bostic mentioned that the nation is at the early stages of taming inflation. Similarly, Federal Reserve Governor Christopher Waller stated that he does not support halting rate hikes unless there is clear evidence that inflation is decreasing towards the targeted 2% objective.
However, the Minutes from the latest Federal Open Market Committee (FOMC) Meeting indicate a lack of consensus among policymakers. While some believe that raising interest rates is appropriate, others advocate for a policy shift.
Despite the rebound in US stock futures, the cautious mood persists in Asia due to the absence of significant data/events and the anticipation of upcoming mid-tier data from the US and Germany.
Traders are particularly focused on the second readings of US and German Q1 GDP, along with the US weekly Jobless Claims, the Chicago Fed National Activity Index, and Pending Home Sales. However, the US debt ceiling talks will undoubtedly attract major attention.
___
Please continue to read new articles here about merchandise assessed by Waytrade.
