US T-bond yields retreat, S&P 500 Futures ease as Omicron-linked optimism fades

• US 10-year Treasury yields snap two-day rebound, S&P 500 Futures seem indecisive.
• Hopes of Omicron’s cure join easy restrictions due to the virus to favor sentiment.
• Cautious mood ahead of the key US data, rising US inflation expectations and mixed concerns over covid test the optimists.

Risk appetite sours during early Wednesday as market players brace for the US data amid a quiet Asian session. The key barometers, namely the US Treasury bond yields and stock futures print mild losses at the latest.

That said, the US 10-year Treasury yields dropped two basis points (bps) to 1.467% whereas the S&P 500 Futures remain mostly unchanged around 2,640 even as the Wall Street benchmarks snapped a three-day downtrend.

US President Joe Biden pushes for more vaccinations and sounds cautiously optimistic during the national address. The US leader also said, per The Hill, “I think there is still a possibility that his Build Back Better agenda can get done, despite Sen. Joe Manchin’s opposition of the climate and social spending bill.”

It’s worth noting that the news that the US Food and Drug Administration (FDA) is up for authorizing a pair of pills from Pfizer and Merck to treat Covid-19 as soon as this week, per Bloomberg’s sources, also underpinned the risk-on mood. On the same line were the updates from the Defense One suggesting, “US army creates single vaccine effective against all covid, sars variants.”

On the contrary, the escalating tussles between the US and China, as well as with Russia, join the recently improving US inflation expectations, per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, also test the market’s optimism.

Above all, the market’s caution ahead of crucial weekly events and fears emanating from the loose activity restrictions despite a jump in the Omicron cases seem to challenge the sentiment.

Among the key US data are the final Q3 GDP and the CB Consumer Confidence for December.

Read: Conference Board Consumer Confidence December Preview: Where do Americans turn for optimism?