S&P 500 Futures, US Treasury yields portray market’s anxiety ahead of Fed Chair Powell’s testimony

• Markets remain dicey as traders await top-tier events amid mixed feelings.
• US Treasury bond yields remain sidelined after the week-start zigzag, S&P 500 Futures print mild gains around two-week high.
• China-linked news, recent improvement in US data probe previously optimism.
• Fed Chair Jerome Powell needs to defend hawkish stance amid policy pivot chatters.

Global traders portray the typical pre-event caution as multiple top-tier catalysts loom for release during early Tuesday. Adding strength to the market’s inaction could be the mixed signals from the US and China, as well as the month-start anxiety.

While portraying the mood, S&P 500 Futures print mild gains around a two-week high marked the previous day, up 0.15% intraday near 4,060 at the latest. It’s worth noting that Wall Street closed mixed the previous day. Elsewhere, US 10-year Treasury bond yields initially dropped to a one-week low of 3.897% on Monday before ending the day with mild gains near 3.96%, staying around the same level by the press time. On the same line, the two-year counterpart ended Monday’s North American trading session with 0.60% intraday gains at 4.88%, mostly unchanged at the latest.

An improvement in the US Factory Orders for January, to -1.6% MoM versus -1.8% expected and -1.7% prior, appeared to have triggered the rebound in the US Treasury bond yields after an initial pullback on Monday.

Elsewhere, the fears emanating from the likely Sino-American tension, due to the anticipated meeting of the US and Taiwanese Officials, join recent doubts about the Fed’s hawkish move to challenge the traders ahead of the key events. Additionally probing the optimists could be the Financial Times (FT) headlines suggesting China’s lowest growth target in decades signals new era of caution.

During the last week, the softer prints of the second-tier US data, including ISM PMIs, Consumer Confidence and Durable Goods Orders joined comments from Atlanta Fed President Raphael Bostic to renew concerns about the policy pivot and favored the risk-on mood.

Looking forward, Federal Reserve (Fed) Chairman Jerome Powell appears before the Senate Banking Committee on Tuesday and will be eyed for clear directions. The policymaker should defend the US central bank’s hawkish bias to keep the bears hopeful ahead of Friday’s US jobs report. Also important are monetary policy decision from the Reserve Bank of Australia (RBA) and China’s trade numbers for February.

Also read: Forex Today: Markets remain choppy as Powell takes centre stage