S&P 500 Futures ease from two-month high, yields poke monthly low amid Poland-linked risk aversion

• Market sentiment sours amid fresh geopolitical fears surrounding Poland.
• A jump in China’s Covid numbers also challenges the risk appetite.
• Softer US data, mixed comments from Federal Reserve officials keep yields depressed.
• US Retail Sales, headlines from NATO, G7 meetings will be important for fresh impulse.

After witnessing a risk-on mood the previous day, traders experience a downbeat mood on the floor during early Wednesday. That said, the market’s latest fears could be linked to the headlines over the alleged Russian missile attack on Poland, as well as the higher prints of China’s Coronavirus numbers.

While portraying the mood, the S&P 500 Futures part ways from Wall Street’s upbeat performance despite losing some weight by the day’s end. In doing so, the key gauge of the US equity futures drop half a percent to 3,983 as it reverses from the highest levels marked since early September, poked on Tuesday.

On the other hand, the US 10-year Treasury yields keep the previous day’s losses around a one-month low whereas the two-year Bond coupons also print a three-day downtrend. That said, both the Treasury yields are depressed around 3.77% and 4.33% by the press time.

Talking about Poland, Russian-made missiles killed two people in the European nation bordering Ukraine and amplified geopolitical fears due to its status as a member of the North Atlantic Treaty Organization (NATO). Even if Moscow’s military denies any such attempt, the NATO Ambassadors and the members of the Group of Seven Nations (G7) are up for emergency meetings and raised fears.

Elsewhere, China is going through a rough patch when it comes to the Coronavirus as the latest count appears worrisome. That said, China’s National Health Commission (NHC) reported around 17,772 new Covid cases on Tuesday, the highest total since April 2021. It should be observed that the manufacturing hub Guangzhou, unfortunately, accounts for more than a quarter of the national tally.

Alternatively, softer US data and the Federal Reserve (Fed) policymakers’ assent to the market’s 50bps rate hike concerns seem to challenge the pessimists. On Tuesday, the US Producer Price Index (PPI) for October dropped to 8.0% YoY versus market forecasts of 8.3% and the downwardly revised prior of 8.4%.

Moving on, the geopolitical and Covid woes can challenge the riskier assets ahead of the US Retail Sales for October, expected 1.0% versus 0.0% prior.

Also read: Conflicting Poland reports put a bid back into Wall Street, S&P 500 pops