S&P 500 Futures trace Wall Street’s losses, yields dribble at two-month high

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  • Market sentiment remains sour amid hawkish central bankers, concerns over China.
  • Chatters over Suez Canada added to the risk-off mood of late.
  • S&P 500 Futures remain pressured at five-week low, yields seesaws after rising the most in three weeks.
  • US ISM Manufacturing PMI, NFP data are in focus after the latest softer US ADP.

Risk profile remains weak during Thursday’s Asian session as traders fear the central banks’ aggression despite recently mixed data. Also keeping traders on their toes are concerns surrounding China and Suez Canal blockage.

While portraying the mood, the S&P 500 Futures drop 0.36% intraday as bears keep reins at the lowest levels since late July, at 3,930 by the press time. Further, the US 10-year Treasury yields seesaw around 3.20% after rising the most in two weeks while poking the highest level since late June. It should be observed that the US two-year Treasury yields rise to the highest since 2007, at 3.52% by the press time.

US data wasn’t either too positive but could manage to keep the greenback buyers hopeful amid the recently loose links between ADP and Nonfarm Payrolls (NFP). That said, US ADP Employment Change rose by 132K versus 288K expected and 270K prior. However, the average wage increases in the US in August were 7.6% y/y and the same kept the Fed policymakers hawkish.

Following the data, Cleveland Federal Reserve Bank President Loretta Mester said on Tuesday that she was not anticipating the Fed to cut rates next year, as reported by Reuters. Further, the newly appointed Dallas Fed President Lory Logan joined the lines of hawkish fellow US central bankers while saying, “Restoring price stability is No. 1 priority.”

Not only in the US but strong Eurozone inflation data and the hawkish comments from the European Central Bank (ECB), as well as from the Bank of Japan (BOJ) policymakers, also portray the central bankers’ broadly hawkish stance.

Elsewhere, Taiwan’s first shooting at a Chinese drone and more virus-led lockdown on the dragon nation joined the second month of manufacturing activity contraction in China, per NBS Manufacturing PMI, to weigh on the risk appetite. On the same line was the latest statement from the United Nations (UN) Human Resource Office mentioning that the Chinese government has committed ‘serious human rights violations’ in Xinjiang. Additionally, a blockage in the Suez Canal by Singaporean-flagged oil tanker Affinity V previously challenged the risk appetite but the latest refloating of the ship couldn’t trigger the optimism.

Looking forward, the US ISM Manufacturing PMI for August could entertain the traders ahead of Friday’s US Nonfarm Payrolls (NFP).

Also read: US ISM Manufacturing PMI Preview: Slowing growth or recession?