S&P 500 Futures print mild gains as stimulus hopes battle firmer US Treasury yields

• S&P 500 Futures takes rounds to record top flashed on Friday.
• US President Joe Biden reiterates readiness to rollout stimulus this week.
• US-EU overcome steel, aluminum tussles to fight against China production.
• Fed tapering concerns underpin US Treasury yields, US ISM PMI eyed for short-term direction ahead of Wednesday monetary policy decision.

S&P Futures walk on tight rope amid contrasting catalysts amid early Monday. While US President Joe Biden keeps US investors hopeful, the pre-Fed sentiment is gradually grinding the bulls.

“The Build Back Better framework — which is, God willing, going to be voted on as early as — sometime this coming week,” said US President Biden per the White House communiqué dated October 31. Before that, the Democrats were struggling to get Republicans’ support for the infrastructure spending plan but Biden showed readiness to go ahead alone if needed.

It should be noted that the positive start to the Q3 earnings season and receding covid fears also underpin the equities.

However, firmer US Treasury yields keep the equities pressured amid steady prints of the Fed’s preferred inflation gauge. That said, the US Core PCE Inflation data remained firmer around 3.6%, versus a 3.7% market forecast, for September.

It should be noted that China’s official PMIs printed another set of downbeat figures for October but the Caixin Manufacturing PMI offered a positive surprise. Further, the US-China tensions escalate as the US joins hands with the European Union (EU) over steel and aluminum tariffs to challenge Beijing’s steel industry.

Against this backdrop, US 10-year Treasury yields rise 1.6 basis points (bps) to 1.57% while the US Dollar Index (DXY) stays firmer above 94.00 after posting the heaviest daily jump since mid-June.

Looking forward, the US ISM Manufacturing PMI, expected 60.4 versus 61.1, may entertain investors ahead of Wednesday’s Federal Reserve (Fed) monetary policy meeting. Even if the event isn’t accompanied by Fed Chair Jerome Powell’s press conference and economic forecasts, hopes of tapering keep the case interesting.

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