US Treasury yields, S&P 500 Futures stage rebound ahead of US Michigan Consumer Sentiment

• Global markets take a sigh of relief after multiple days of drawdown.
• Comments from Fed’s Powell, neutral prints of US PPI seem to favored corrective pullback.
• Preliminary readings of US Michigan Consumer Sentiment for May eyed for fresh impulse.

Traders took a break from a stellar bear show during an inactive Asian session on Friday. Although a lack of major negatives could be mentioned as the key catalyst behind the relief rally, comments from Fed Chair Jerome Powell and the latest US Producer Price Index (PPI) could also be linked, indirectly, to the market’s recent behavior.

While portraying the mood, the US 10-year Treasury yields rebound from a two-week low, up nearly four basis points (bps) to around 2.89% by the press time. Also, the S&P 500 Futures rise half a percent to 3,950 while licking its wounds near a one-year low.

The US PPI’s matching of 0.5% MoM market consensus joins Fed Chairman Jerome Powell’s reiteration of 50 bps rate hikes in the next two meetings to trigger the latest corrective moves. On the same line were comments from San Francisco Fed President Mary Daly who mentioned, “Is it 50, is it 25, is it 75? Those are things that I’ll deliberate with my colleagues, but my own starting point is we don’t want to go so quickly or so abruptly that we surprise Americans”.

Elsewhere, China mandates three-day “at home” stay for residents for covid testing to tame and confirm the covid resurgence in Beijing. This challenges the market’s risk appetite amid a sluggish session. Also negative for the sentiment are the fears of an escalation in the West versus Russia tussles as Moscow recently warned Finland over its plans to join the North Atlantic Treaty Organization (NATO).

It should be noted, however, that a lack of major data/events in Asia and a pause in risk-aversion aren’t the strong catalysts for directions. Hence, the traders will wait for the preliminary readings of US Michigan Consumer Sentiment data for May, expected 64 versus 65.2 prior, for fresh impetus.

Read: Michigan Consumer Sentiment Index May Preview: Can Americans keep their spending habits?