S&P 500 Futures regain 4,150, Treasury yields stay firmer amid cautious optimism

• Markets edge higher as traders welcome June after an upbeat May.
• S&P 500 Future reverse the previous day’s pullback from monthly top.
• US 10-year Treasury yields print three-day uptrend to pare the biggest monthly loss since late 2021.

Global traders offer a warm welcome to June following the first upbeat month for equities in five, as well as recalling the bond bears after four months of a rise in Treasury bond yields.

While portraying the mood, the US Treasury yields underpin the US dollar rebound, up two basis points to 2.86% by the press time. However, the S&P 500 Futures rise half a percent near 4,150 and confused traders.

The cautious optimism could be linked to mixed comments from the US policymakers and unclear data from the US. However, firmer yields and the US dollar rebound challenge bulls ahead of the key US ISM Manufacturing PMI for May, expected 54.5 versus 55.4 prior, as well as Fedspeak.

It’s worth noting that doubts over the Fed’s next moves, despite recently hawkish rhetoric, keep the risk barometer S&P 500 Futures on the front foot despite the firmer US Treasury yields and the US dollar.

Even so, comments from US Treasury Secretary Janet Yellen and Atlanta Fed President Raphael Bostic, as well as US President Joe Biden’s readiness for using harsh measures on Russia, challenge the recent positivity in the market.

“US Treasury Secretary Janet Yellen said on Tuesday that she was wrong in the past about the path inflation would take, but said taming price hikes is President Joe Biden's top priority and he supports the Federal Reserve's actions to achieve that,” said Reuters. On the other hand, Fed’s Bostic crossed wires during an interview with MarketWatch as he said that his suggestion that the central bank takes a September “pause” in its push to raise interest rates should not be construed in any way as a “Fed put,” or belief that the central bank would come to the rescue of markets.

Also weighing on the gold prices could be comments from US President Joe Biden as he said, “If Russia does not pay a heavy price for its actions, it will send a message to other would-be aggressors that they too can seize territory and subjugate other countries,” per The New York Times.

It needs to be observed that the US Chicago Purchasing Managers’ Index and CB Consumer Confidence both rose past forecasts for May whereas the Dallas Fed Manufacturing Business Index dropped to the lowest levels in two years. Also, Australia’s Q1 GDP and China’s Caixin Manufacturing PMI for May both came in better than expected and stop the bears from retaking control.

To sum up, mixed concerns and data test the market’s sentiment as traders brace for second-tier US data/events.