S&P 500 Futures: US stimulus hopes favor bulls despite Treasury yields rebound

• S&P 500 Futures consolidates recent losses amid cautious optimism.
• US Democrats expect deal on President Biden’s stimulus plan on Thursday.
• Fed tapering tantrum, cautious mood ahead of US GDP, ECB challenge buyers.

S&P 500 Futures print mild gains around 4,550 during early Thursday. The risk barometer cheers the hopes of US stimulus while also marking a cautious mood ahead of the key data/events to consolidate the latest losses around the record top.

Late on Wednesday, Bloomberg came out with the news suggesting the White House’s (WH) push for faster progress over the budget talks ahead of the December deadline for the debt ceiling extension. The news joins the Democratic Party members’ scheduling of an additional meeting for President Joe Biden to sort out some last issues with expectations of a deal on the much-awaited stimulus.

Elsewhere, the US 10-year Treasury yields recover the heaviest daily fall since mid-August, recently picking up bids to 1.55%, up 2.2 basis points (bps), as market players expect further tightening of the monetary policies by the key global central banks. The market consensus could be linked to the firmer inflation expectations and recently firmer data from the developed economies, as well as receding fears of the coronavirus.

Also, the latest updates from Canada, the UK and Australia hints at an end to the easy money saga and should have favored the US Treasury yields. That being said, the Bank of Canada (BOC) announced the end of bond purchases and the UK also cuts bond issuance. Further, Australia’s strong prints of the RBA Trimmed Mean CPI also push the Reserve Bank of Australia (RBA) towards a rate hike.

Additionally favoring the US Treasury yields were the latest challenges to the market sentiment from the US-China front as the world’s top two economies again jostle over issues concerning telecom and Taiwan.

It’s worth noting that a good start to the Q3 earnings season and the recent positive performance of Wall Street adds to the S&P 500 Futures’ strength.

Amid these plays, the US Dollar Index (DXY) remains pressured around 94.00 while the commodities trade is mixed at the latest.

Moving on, the ECB and the US Q3 GDP will be the key events for the day while chatters concerning US stimulus adds burden on the market watchers.

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