S&P500 Futures print mild losses, yields dribble as hawkish central bank moves loom amid inflation fears

• Market sentiment remains downbeat as major central banks cite inflation woes to defend hawkish policies.
• BI, BoE, SNB, CBRT and Banxico Interest Rate Decisions to entertain traders after China-inflicted market boredom.
• S&P500 Futures print four-day downtrend, bond yields remain indecisive as Fed’s Powell fail to impress hawks despite confirming inflation fears.
• US-China tension, doubts about Beijing’s optimism also weigh on sentiment amid sluggish session.

China holidays join fears of “higher for longer” interest rates to offer a boring but downbeat Asian session on Thursday. While portraying the mood, Wall Street closed in the negative zone for the third consecutive day while the US Treasury bond yields remained intact after a volatile day. It should be noted that the S&P500 Futures mildly offered for the fourth consecutive day near 4,405 whereas the US benchmark yields stabilize by the press time.

Although Federal Reserve (Fed) Chairman Jerome Powell stuck to hawkish bias in bi-annual testimony to the US House Financial Services Committee, the absence of any fresh comments, as well as contrasting statements from other Fed Officials, weigh on the US Dollar despite sour sentiment. That said, Federal Reserve Bank of Chicago President Austan Goolsbee prod US Treasury yields and underpin the US Dollar weakness as he said that the decision last week was a close call for him. The central bank has to “do more sniffing” before another rate hike, Fed’s Goolsbee added.

Not only the Fed, but policymakers from the European Central Bank (ECB), Swiss National Bank (SNB) and the Bank of England (BoE) also show readiness for interest rate hikes and favor the risk-off mood. More importantly, the Central Bank of the Republic of Türkiye (CBRT) is up for a heavy 12.5% interest rate lift, from the current 8.5% level, and keeps traders on their toes.

Elsewhere, doubts about China’s rejections of recession woes and the Sino-American tension add strength to the downbeat risk appetite, despite the dicey session. China Vice Premier He Lifeng recently lauded the nation’s economic transition. “China's economic development is showing sound momentum in the first half of the year,” Chinese media Xinhua came out with the statements from China Vice Premier He Lifeng as he met Singapore's Temasek Chairman Lim Boon Heng earlier this week in Beijing.

That said, the US-China tensions keep escalating after US President Joe Biden terms his Chinese counterpart “a dictator” while Beijing discards criticism of its behavior on the human rights front. “China hit back on Wednesday after US President Joe Biden referred to President Xi Jinping as a "dictator", saying the remarks were absurd and a provocation, an unexpected flare-up following attempts by both sides to reduce friction,” said Reuters.

Amid the sluggish plays, the US Dollar Index remains pressured at the monthly low surrounding 102.00 whereas prices of Oil and Gold fade the previous day’s corrective bounce, close to $73.40 and $1,933 in that order by the press time.

Moving on, the aforementioned central bank events and the second-tier US data may entertain the market players.

Also read: Forex Today: US Dollar weakens despite Powell; BoE in focus after UK CPI