S&P 500 Futures stay pressured at 21-month low, yields poke multi-year high amid risk-off mood

• Market sentiment remains sour as fears of recession, geopolitical tension escalate.
• Russian pipeline leak intensifies the European energy crisis, WH Adviser Deese signals more drama ahead.
• Hawkish Fedspeak, upbeat US data also sour the sentiment.

After a turnaround Tuesday, markets returned to the bear’s table as fears of economic slowdown and more geopolitical tension weigh on the mood during early Wednesday.

While portraying the mood, the S&P 500 Futures drop 0.30% intraday to poke the 21-month low marked the previous day while the US 10-year Treasury bond yields remain firmer at the highest levels since 2011, up two basis points (bps) near 3.98% at the latest. It’s worth noting that Wall Street closed mixed as traders remained unconvinced over the next step of major central bankers amid inflation woes.

A major gas spill in the Baltic Sea, due to multiple leaks in Russia’s gas pipeline, raises woes that the Eurozone’s energy supply problems are likely to be permanent. The same intensify fears of recession inside the bloc, especially amid an absence of impressive data and inflation fears. That said, Reuters quoted European Commission Chief Ursula von der Leyen on Tuesday saying, “The leaks of the Nord Stream pipelines were caused by sabotage, and warned of the "strongest possible response" should active European energy infrastructure be attacked.” This adds to the market’s fears of more geopolitical tension between the West and Russia.

Further, the World Bank’s (WB) downbeat economic forecasts for China and chatters that the dragon nation called key market players to defend the equities also printed vulnerabilities in the economy of the world's biggest commodity user.

Elsewhere, the International Monetary Fund (IMF) openly criticized Britain's new economic strategy on Tuesday, following another slide in bond markets that forced the Bank of England (BOE) to promise a "significant" response to stabilize the economy, reported Reuters.

It should be noted that the firmer US data and mixed Fedspeak also tried to tame the optimism of late. That said, US Durable Goods Orders declined by 0.2% in August versus the market forecasts of -0.4% and the revised down prior reading of -0.1%. Additionally, US CB Consumer Confidence improved for the second consecutive month to 108.00 for September versus 104.5 expected and 103.20 prior.

On the other hand, Chicago Fed President Charles Evans said, “At some point, it will be appropriate to slow the pace of rate increases and hold rates for a while to assess the impact on the economy." However, markets cared more for St. Louis Federal Reserve Bank President James Bullard who mentioned that they have a serious inflation problem in the US, as reported by Reuters. "More rate rises to come in future meetings." Additionally, Minneapolis Fed President Neel Kashkari said the central bank is moving "very aggressively," and there is a high risk of "overdoing it."

Recently, comments from White House economic adviser Brian Deese tried to tame the bears but could not as San Francisco Fed President Mary Daly raised fears of economic slowdown.

Moving on, a light calendar could restrict immediate moves of the market but can keep the bears hopeful amid the aforementioned negatives. Even so, speeches from ECB President Christine Lagarde and Fed Chair Jerome Powell may entertain the pair buyers if they speak about matters relating to the monetary policy.