S&P 500 Futures print mild gains amid sluggish yields, central banks in the spotlight

• Market sentiment dwindles as RBA begins the key central bankers’ play scheduled for the week.
• Yields fade recent recovery amid mixed data, comments from US/Russia.
• Hawkish Fed bets, covid/geopolitical woes keep DXY buyers hopeful.
• US ISM PMI can entertain traders ahead of FOMC, NFP.

Risk profile remains blurred, despite being mildly positive, as the Reserve Bank of Australia (RBA) kick-starts the central bankers’ week on Tuesday. Other than the event-linked anxiety, the mixed concerns in the market and a light calendar before the RBA also allow the bears to take a breather before the bumper catalysts.

US 10-year Treasury yields remain sidelined near 4.05% by the press time, after rising in the last two consecutive days. It’s worth noting that the bond yields snapped a 10-week uptrend with the previous week’s negative closing. Even so, the bond coupons ended October on a firmer footing while posting the third positive closing. It should be observed that Australia’s 10-year Treasury yields also fade the previous day’s bounce off a one-month low, down 0.05% around the 3.825% level.

Elsewhere, Wall Street printed the first daily loss in three but S&P 500 Futures print mild gains at the latest.

The downbeat US data and hopes of more easing in the oil prices, and inflation in turn, appeared to have favored the market’s latest risk-on mood. On the same line could be comments from US President Joe Biden and Russian leader Vladimir Putin.

On Monday, the US Chicago Purchasing Managers’ Index and Dallas Fed Manufacturing Business Index for October came in at 45.2 and -19.4 versus 47.0 and -15.0 expected respectively.

“US President Joe Biden on Monday called on oil and gas companies to use their record profits to lower costs for Americans and increase production, or pay a higher tax rate, as he battles high pump prices with elections coming in a week,” said Reuters. On the other hand, Russia’s Putin said he can set up a gas hub in Turkey ‘quite quickly’ and was sure gas contracts will be signed. The Russian leader also added that there will be many in Europe who want to do so.

Even so, the CME’s FedWatch Tool signals a nearly 90% chance of the Fed’s 75 basis points of a hike on Wednesday’s all-important Federal Open Market Committee (FOMC) meeting, which in turn challenges the markets’ cautious optimism.

Additionally, fresh covid-led lockdowns in China and Russia’s rejection to accept peace on the grain deal also seem to keep the bears hopeful.

Moving on, the US ISM Manufacturing PMI, likely to ease to 50.0 versus 50.9 prior, will direct immediate market moves. Following that, the US S&P Global Manufacturing PMI for the stated month, expected to confirm the initial forecast of 49.9 figure, will join the JOLTS Jobs Openings for September, forecast 10M versus 10.053M prior, to also entertain traders.

Also read: Forex Today: Dollar strengthens ahead of RBA, Fed and more