Yields keep Monday’s rebound, S&P 500 Futures rise 0.50% even as Omicron fears intensify

• US 10-year Treasury yields stay mild bid after bouncing off three-week low.
• S&P 500 Futures print daily gains despite Wall Street’s losses.
• US marks first Omicron-linked death, NZ pushes back border easing plan.
• Biden, Pelosi stay hopeful over BBB despite Manchin’s rejection.

Market sentiment remains divided on early Tuesday as fears of the South African covid variant battle stimulus hopes. Adding to the traders’ confusion is a lack of major data/events and a year-end holiday mood.

That said, the US 10-year Treasury yields keep the previous day’s recovery moves from a 16-month-old support line, up one basis point (bps) near 1.42%, whereas the S&P 500 Futures rise 0.50% by the press time. It’s worth noting that the US Dollar Index (DXY) prints mild losses which in turn helps gold and WTI crude oil to lick remain positive on a day.

The US reports the first death linked to the Omicron, in Texas after the US Disease Control and Prevention (CDC) said, per Reuters, “Omicron is now the most common coronavirus variant in the US, accounting for nearly three-quarters of COVID-19 cases.”

Comments from the World Health Organization (WHO) and the Imperial College of London were also worrisome, as well as New Zealand’s push-back of the border reopening plan from January to the end of February.

Also challenging the sentiment is the US-China tussles as Chinese foreign minister Wang Yi said, per Reuters, "If there is confrontation, then (China) will not fear it, and will fight to the finish." China’s Wang Yi adds, "There is no harm in competition but it should be ‘positive’”. On the same line were fears of the Fed rate-hike, backed by Fed Board of Governors member Christopher Waller.

On the contrary, chatters that Omicron will peak in 8-10 weeks, backed by Morgan Stanley, join hopes of US President Joe Biden’s ability to roll out the Build Back Better (BBB) despite Senator Joe Manchin’s rejection to vote in favor, seem to underpin the latest market consolidation amid a quiet session.

That said, the year-end holiday mood may restrict the short-term market moves ahead of Wednesday’s US Core Personal Consumption Expenditures and Q3 GDP data.