S&P 500 Futures pare losses as inflation woes battle US stimulus hopes, China news

• S&P 500 Futures lick its wounds near seven-week high, mildly offered of late.
• US President Biden says he is close to striking infrastructure deal.
• China’s Evergrande has hopes to sell its property despite canceled deal with Hopson.
• Fedspeak highlights reflation fears, US Treasury yields poke key resistance ahead of PMIs.

S&P 500 Futures trim early Asian session losses while recently flashing 4,535 level during Friday. In doing so, the risk barometer struggles to portray the previous day’s inflation-led market fears amid mixed headlines concerning the US stimulus and from China.

US President Joe Biden hints at the infrastructure deal during the CNN town hall event in Baltimore. “President Joe Biden said on Thursday he was close to striking a deal to pass major infrastructure and social spending measures, after weeks of intraparty bickering among his fellow Democrats,” per Reuters.

The South China Morning Post (SCMP), on the other hand, tried to soothe the Evergrande-led jitters while citing the company filing with the Hong Kong stock exchange. “China Evergrande rival Hopson Development Holdings Limited, which had sought to buy half of the embattled developer’s property management unit, still considers the purchase agreement ‘legally binding’ despite Evergrande rescinding the sale on October 12,” said SCMP. It’s worth noting that Evergrande paid an $83.5 million bond interest payment, per China's Securities Times, which in turn adds to sentiment-positive headlines.

Elsewhere, Federal Reserve Governor Christopher Waller said that the next few months will be critical to see whether inflation is transitory, as reported by Reuters. Before that, Federal Reserve Governor Randal Quarles and Cleveland Fed President Loretta Mester highlighted inflation fears.

It should be observed that the US 10-year Treasury yields remain firmer around 1.70%, recently up 1.9 basis points (bps) near 1.694%, whereas the US Dollar Index (DXY) keeps the previous day’s rebound near 93.75 by the press time.

Looking forward, the preliminary readings of the October PMIs will be important to watch for market players after the inflation woes poked equity investors of late. Should the activity data arrives as strong, also highlight price pressure, the US dollar’s recovery moves may have further upside to go, which in turn can weigh on the commodities and Antipodeans.

Read: US Stocks Forecast: S&P 500 moves in on all time highs despite rising yields