S&P 500 Futures pare recent losses as yield retreat, Ukraine hints at peace

• S&P 500 Futures differs from Wall Street’s losses, snaps three-day downtrend.
• US 10-year Treasury yields ease from 32-month high, 5-year coupons drop from May 2019 levels.
• An adviser to Ukraine’s President Zelenskyy hints at peace agreement with Russia at the latest in May.
• China locks down Langfang city near Beijing due to covid outbreak.

It’s déjà vu feeling for global traders as market sentiment improves during the early Asian session on Tuesday, as the previous day, even as key challenges to risk appetite remain unsolved.

While portraying the mood, S&P 500 Futures rise 0.22% to snap a three-day downtrend while the US 10-year Treasury yields step back from the highest levels since July 2019, down 1.1 basis points (bps) to 2.129% by the press time.

It’s worth noting that the 10-year Treasury yields rose 13 basis points (bps) to refresh 32-month high the previous day while the 5-year coupon rallied to the highest since May 2019 level, currently down four bps near 2.088%.

Helping the market sentiment are the latest headlines from Ukraine as Sputnik quotes an Adviser to Ukraine President Volodymyr Zelenskyy’s office, Oleksiy Arestovych, to raise expectations of a Moscow-Kyiv peace in as early as two weeks or before late May. On the same line were the latest comments from Ukraine President Zelenskyy who said that the peace talks with Russia will continue on Tuesday, following an abrupt pause on Monday.

However, reports of a Russian drone over Poland and sanctions on Moscow, as well as Russia-Belarus rejection to pay energy supplies in the USD, challenge the market’s mood. Additionally, weighing the risk appetite is the news that China announced activity restrictions in Langfang city near Beijing, due to the covid outbreak. The dragon nation witnesses heavy daily infection numbers and raise fears of another COVID-19 wave. The latest figures from China were the highest since May 2020.

On Monday, market sentiment soured after an initially positive mood as optimism surrounding the Ukraine-Russia peace ebbed, also joined by the news of coronavirus resurgence in China.

Looking forward, market players will keep their eyes on the Ukraine-Russia headlines for fresh impulse while China’s Retail Sales and Industrial Production for February, expected 3.0% and 3.9% YoY versus 1.7% and 4.3% respectively, will decorate the calendar in Asia.

Read: Forex Today: Dollar on the rise amid mounting tensions with Russia