S&P 500 Futures turn pale above 4,100 as US Treasury yields stay firmer ahead of Fed, NFP

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  • S&P 500 Futures dribble around nine-week low, retreat from daily high of late.
  • US 10-year Treasury yields hold onto Friday’s recovery moves.
  • Sentiment remains pressured as Chinese activities contracted in April, Ukraine signals Russia’s rush to takeover Moldova.
  • Fed’s 0.50% rate hike is given and hence balance-sheet normalization will be crucial to watch.

Market sentiment remains dubious amid a quiet Asian session on Monday as traders await the key catalysts scheduled during the week.

That said, the S&P 500 Futures print mild gains around 4,130, up 0.20% intraday, as bears take a breather around the lowest levels since late February, marked the previous day. It’s worth noting that the Wall Street benchmarks slumped the previous day on firmer yields, as well as disappointments from tech giants like Amazon and Apple.

On the other hand, the US 10-year Treasury yields extend the previous day’s recovery moves while rising 6.4 basis points (bps) to 2.947% by the press time. In doing so, the key bond coupon approaches the four-year high marked during late April surrounding 2.98%.

The mixed concerns could be linked to the market’s anxiety ahead of this week’s Federal Reserve (Fed) verdict, as well as Friday’s US Nonfarm Payrolls (NFP). Also challenging the market moves, mainly for the bears, are the receding odds in favor of the hawkish Fed and downbeat activity numbers from China.

China’s PMIs for April came in softer than expected and prior, with the headline NBS Manufacturing PMI declining to 47.4 versus 48 forecast and 49.5 previous reading.

Although a 0.50% rate hike by the Fed is almost given, traders are concerned more about the balance sheet normalization and the pace of the rate hikes in near future.

Elsewhere, comments from Ukraine suggest that Russia braces to takeover Moldova, which in turn poses a serious challenge to Kyiv. On the other hand, Moscow rejects chatters that support Russia’s readiness to use nuclear weapons.

Hence, mixed headlines and anxiety at the start of the key week keep traders on their toes during early Monday, which in turn favors the US Treasury yields and the US Dollar. That said, today’s ISM Manufacturing PMI for April, expected 58.0 versus 57.1 prior, will offer intraday directions to the market.

Also read: Week Ahead on Wall Street: Apple and Amazon can’t save us, is it time to abandon ship?