S&P500 Futures retreat, yields grind higher amid cautious mood ahead of US debt-ceiling talks

• Market sentiment remains dicey as traders await key data/events after witnessing unimpressive Fed bank survey details.
• S&P500 Futures print mild loss to snap two-day uptrend, yields struggle to defend latest run-up.
• Upbeat US inflation expectations, US Treasury Secretary Yellen’s fears of defaulting prod market optimists.
• Return of full markets can entertain traders ahead of US debt-ceiling talks, inflation data.

The risk profile dwindles during early Tuesday as market players await the key US debt-ceiling talks amid recently escalating fears of the US default. Additionally challenging the market optimism are unimpressive comments from Chicago Federal Reserve Bank President Austan Goolsbee and the Federal Reserve’s (Fed) quarterly bank loan survey. It’s worth noting, however, US Treasury Secretary Janet Yellen's fears of the US missing the bond payments on June 01 and the US-China tension also spoil the mood.

Amid these plays, S&P 500 Futures print mild losses around 4,150, the first in three, whereas the US 10-year and two-year Treasury bond yields struggle to extend the three-day uptrend during early Tuesday.

US President Joe Biden braces to confront Republican House Speaker Kevin McCarthy, Republican Senate Minority Leader Mitch McConnell and top congressional Democrats at the White House on Tuesday. Ahead of the meeting, Reuters shares news suggesting US Treasury Secretary Janet Yellen’s personal reaching out to business and financial leaders to explain the "catastrophic" impact a US default on its debt would have on the U.S. and global economies, two sources familiar with the matter said on Monday.

Elsewhere, the Federal Reserve’s (Fed) quarterly bank loan survey showed tighter standards and weaker demand for commercial and industrial (C&I) loans to large and middle-market firms, as well as small firms, over the first quarter.

It should be noted that Fed’s Goolsbee said, “It is too early to say what the next policy move will be,” while explaining that there were a lot of uncertainties regarding the impact of credit tightening on the economy.

Additionally weighing on the market sentiment could be an improvement in the US inflation expectations as per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data.

Amid these plays, markets remain dicey but the US Dollar Index (DXY) grinds higher. Even so, prices of the Gold and WTI crude oil remain mildly bid by the press time.

Moving on, debt ceiling talks and central bankers’ comments may entertain traders amid a light calendar ahead of Wednesday’s US Consumer Price Index (CPI) for April.

Also read: Forex Today: AUD and NZD continue to outperform, while USD gets support from Treasury yields