US Treasury yields, S&P 500 Futures tread water on Japan holiday

• US 10-year Treasury yields stay intact after the heaviest daily jump in over a week.
• S&P 500 Futures struggle around record top, retreats of late.
• Fed rate hike concerns gain boost from US President Biden, US data.
• Preliminary PMIs for November eyed for fresh impulse ahead of Wednesday’s FOMC Minutes.

Market sentiment remains sluggish during Tuesday’s Asian session as Japan’s Labor Thanksgiving Day holiday restricts bond and equity moves.

That said, the benchmark US 10-year Treasury yields clings to a 1.627% level, a one-week high after reversing the previous week’s loss in a single day on Monday. S&P 500 Futures, on the other hand, trims early day’s mild gains around 4,680, up 0.05% at the latest.

US President Joe Biden’s decision to nominate Jerome Powell for another term as the Federal Reserve (Fed) Chair and Richard Clarida for Vice-Chairman propelled the market’s speculations of the Fed rate hikes. The decision was later welcomed by Atlanta Federal Reserve President Raphael Bostic, as well as from US Treasury Secretary Janet Yellen.

Also pushing the Fed closer towards monetary policy tightening were the latest US data. The Chicago Fed National Activity Index rose to 0.76 in October versus -0.18% (revised down figure). Further, US Existing Home Sales increased beyond 6.2M forecast and 6.29M previous readouts to 6.3M during the last month.

While the Fed rate hike concerns propelled the US bond coupons and the tested equities, mixed comments from Fed’s Bostic and Yellen also raised bars for the momentum traders. While Fed’s Bostic highlighted faster taper and covid economy, Yellen mentioned during the Bloomberg interview that price pressures subside as life normalizes in 2022.

Adding to the filters are recent fears concerning the coronavirus, mainly emanating from the UK and Eurozone. In the US, the White House Covid Response Coordinator Jeffrey Dunston Zients shrugged off the virus-led lockdown fears while saying, “Have tools to accelerate out of pandemic.”

It should be noted that the US Dollar Index (DXY) rises to the fresh high since July 2020 but can’t stop the gold buyers from consolidating the heaviest daily loss since September 16.

Moving on, the preliminary readings of the Markit PMIs for the UK, Eurozone and the US will be important for near-term market direction as upbeat forecasts keep equity bulls hopeful but fears of rate hikes can propel the yields and challenge share traders.