S&P 500 Futures, US Treasury yields wobble amid quiet markets

• S&P 500 Futures consolidate recent gains, mildly offered around record top.
• US 10-year Treasury yields remain pressured, extends Friday’s pullback from five-month high.
• Fed tapering concerns remain elevated, China flags covid risk but Evergrande tries to placate bears amid a light calendar.
• US stimulus headlines, second-tier data may entertain traders.

Market players remain divided on mixed signals during early Monday. While portraying the mood, the S&P 500 Futures ease from Friday’s record top of 4,551 whereas the US 10-year Treasury yields drop one basis points (bps) to 1.645%, keeping the previous day’s pullback from May 2021 levels.

China’s fresh covid fears join Fed tapering concerns to weigh on the stock futures. Friday’s comments from Fed Chair Jerome Powell turned out in sync with the rest of the Fed policymakers who have been favoring asset purchase adjustments, but stay away from a rate hike. Elsewhere, as per the latest comments from Mi Feng, a spokesman at the National Health Commission, shared by Reuters, ''There is increasing risk that the outbreak might spread further, helped by ‘seasonal factors’”.

On the same line were fears that another real estate firm from China, namely Modern Land, is said to struggle to pay $250 million 12.85% senior notes due October 25.

Alternatively, the US policymakers, including President Joe Biden and House Speaker Nancy Pelosi, signaled nearness to the much-awaited infrastructure spending deal. Further, China’s Evergrande said it has resumed construction work on 16 cites, including the latest six. The troubled real-estate player paid $83.5 million in interest on a U.S. dollar bond and relieved the market’s stress the last week.

It should be noted that the People’s Bank of China’s (PBOC) efforts to safeguard the financial system, recently by a net 190 billion yuan injection, adds to the sentiment-positive catalysts.

Amid these plays, the US Dollar Index (DXY) picks up bids to 93.66, up 0.07% intraday, whereas prices of crude oil and gold remain lackluster, recently easing, around the latest peaks.

Moving on, market players seek clarity over US stimulus and hence updates from the House may entertain the bulls. On the economic calendar, the preliminary readings of Q3 2021 GDP will be the key, but today’s US Chicago Fed National Activity Index for September and Dallas Fed Manufacturing Business Index for October may offer intermediate direction.