US Treasury bond yields stay firmer, stock futures gain too ahead of NFP

• US 10-year Treasury yields snap two-week downtrend, firmer around 1.85%.
• S&P 500 Futures rise over 1.0%, Asia-Pacific markets remain lackluster.
• Pre-NFP caution joins Russia-linked headlines, inflation fears to propel yields.
• Equities seem to brace for a downtick in NFP considering ADP disappointment.

Market sentiment remains mixed as traders brace for the headline US Nonfarm Payrolls during Friday’s Asian session. The yields are up and Asia-Pacific equities drift lower but the stock futures print nice gains by the press time.

The US 10-year Treasury yields rise 1.5 basis points (bps) to 1.842%, bracing for the first weekly gain in three. Further, S&P 500 Futures rise 1.0% around 4,510 whereas stocks in the Asia-Pacific region are mostly weak, except for South Korea’s KOSPI, at the latest.

That said, the key bond coupons rally the most in a week the previous day on central bank actions and mixed US data, not to forget the escalating geopolitical tension. However, comments from Richmond Fed President Thomas Barkin seem to have challenged the bond bears.

On Thursday, the BOE raised benchmark interest rates by 0.25% whereas the ECB refrained from rejecting sooner rate hikes and rather signaled a major policy change brewing, without giving many details though.

US data continues to flash mixed signals ahead of the key jobs report and keep traders on the edge. US ISM Services PMI for January and Q4 Nonfarm Productivity came in strong but Factory Orders for December and Q4 Unit Labor Costs weakened the previous day.

Following the data release, Reuters came out with the news quoting a Fed policymaker to defend the equity buyers, also backed by tech giants. “The US Federal Reserve needs to begin raising interest rates but it is too soon to say how far or fast that process will need to go to bring inflation under control, Richmond Federal Reserve President Thomas Barkin said Thursday,” per Reuters.

Moving on, updates relating to the Russia-Ukraine tussles and inflation headlines may entertain market players before the monthly employment data from the US and Canada. Should the headline US Nonfarm Payrolls (NFP) offer a positive surprise, the market’s optimism may recall USD bulls who have been absent all the week.

Read: NFP preview & why EUR beat GBP 4-fold post ECB/BOE