S&P 500 Futures differ from US inflation-led Wall Street slump, Treasury yields stay firmer

• Market sentiment dwindles as fears of recession, Fed’s aggression jostle with hopes higher stimulus.
• US inflation triggered market’s pessimism, Wall Street had the biggest daily loss in two years.
• Treasury bond Yields refreshed multi-day high, inverted curve highlighted economic slowdown woes.
• Second-tier US data, headlines surrounding stimulus/energy plan can entertain traders ahead of next week’s FOMC.

Global markets take a breather after the US inflation-led volatility, amid a lack of major data/events during Wednesday’s Asian session.

The market’s latest consolidation could also be linked to comments from US President Joe Biden, as well as hopes of more stimulus from China and a solution to the European energy crisis.

Recently, US President Joe Biden mentioned, “I'm not concerned about the inflation report released today.” The US leader also added that the stock market does not always accurately represent the state of the economy.

Furthermore, European Union (EU) Chief Ursula von der Leyen’s plans for the energy price capping and US Trade Representative Katherine Tai’s EU visit to meet European Commission Vice President Valdis Dombrovskis also favor the cautious optimism.

Alternatively, the S&P 500 Futures print mild gains around 3,960, up 0.20% intraday, while the US 10-year Treasury yields poke a three-month high around 3.45%. It should, however, be noted that the inverted yield curve between the 10-year and the two-year bond coupons keeps suggesting the fears of economic slowdown. That said, the 10-year yields print 3.45% mark while its two-year counterpart rises to 3.80% by the press time.

It’s worth observing that Wall Street witnessed the sea of red the previous day, marking the biggest daily slump in two years after the US inflation data. That said, US Consumer Price Index (CPI) for August rose past 8.1% market forecasts to 8.3% YoY, versus 8.8% prior regains. The monthly figures, however, increased to 0.1%, more than -0.1% expected and 0.0% in previous readings. The core CPI, which means CPI ex Food & Energy, also crossed 6.1% consensus and 5.9% prior to print 6.3% for the said month.

Looking forward, updates concerning the energy plan, China’s stimulus and the Russia-Ukraine tussle may entertain traders. Following that, the US Producer Price Index (PPI) before Thursday’s August month US Retail Sales and Friday’s preliminary reading of the Michigan Consumer Sentiment Index for September, will direct the moves. Above all, next week’s Federal Open Market Committee (FOMC) will be a crucial event for the pair traders to watch for clear directions.