S&P 500 Futures Yields

Risk appetite has improved on Wednesday following a pessimistic day in the financial markets caused by concerns over US defaults, particularly in the banking sector. The S&P 500 Futures have seen mild gains around 4,115, partially offsetting the biggest daily loss in a month.

However, the US 10-year Treasury bond yields have seen a two-day downtrend, while the US two-year bond coupons remain under pressure. The US Dollar Index (DXY) remains indecisive around 101.85 after snapping a three-day downtrend, while the prices of Gold and WTI crude oil remain slightly positive.

The First Republic Bank (FRB) and US debt ceiling discussions are the primary drivers of market concerns. The FRB’s disappointing earnings reports and executives’ reluctance to take questions have raised fears of further banking fallouts.

This comes as the US policymakers’ inability to agree on the key debt ceiling, which is due to expire in June, also roils market sentiment.

US Treasury Secretary Janet Yellen has warned that failure by Congress to raise the government’s debt ceiling would trigger an “economic catastrophe” that would send interest rates higher for years to come.

Meanwhile, mixed US statistics have added to the uncertainty surrounding the Federal Reserve’s future moves, contributing to the market’s downbeat bias, despite the latest cautious optimism.

The US Conference Board’s Consumer Confidence Index edged lower to 101.3 for April, versus 104.0 prior, while the one-year consumer inflation expectations eased to 6.2% in April from 6.3% in March.

In contrast, US New Home Sales rose to 0.683M MoM in March versus 0.634 expected and 0.623M revised prior, while the S&P/Case-Shiller Home Price Indices and Housing Price Index both rose past market forecast to 0.4% and 0.5% respectively for February.

Investors will be closely watching the US Durable Goods Orders for March, which are expected to improve to 0.8% versus -1.0% prior, as an important factor in market forecasts. Despite the concerns over the banking sector and the debt ceiling, the market has shown some resilience with mild gains on Wednesday.


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