S&P 500 Futures rebound, yields grind near multi-day high on China, Fed concerns

• Market sentiment improves during a sluggish session, amid mixed headlines.
• Upbeat comments from China President Xi, Finance Minister Liu Kun add to the risk-on mood.
• Concerns surrounding US debt ceiling expiration probes US Dollar bulls.
• Strong US data underpins upbeat Treasury bond yields and US Dollar, despite recent pullback.

Risk profile improves during early Thursday as headlines from China allow traders to pare the previous day’s losses amid a dicey session. Even so, the hawkish concerns surrounding the Federal Reserve (Fed), backed by the strong US data, keep the bears hopeful.

That said, the S&P 500 Futures print mild gains around 4,165 while extending the previous day’s gains whereas the US 10-year Treasury bond yields retreat following the run-up to a 1.5-month high marked on Wednesday, down one basis point to near 3.80% by the press time.

Earlier in the day, China President Xi Jinping crossed wires while showing readiness to deepen industrial and investment cooperation with Asia. “Willing to share ultra-large-scale markets, complete industrial systems and advanced technologies with central Asian countries,” said China’s Xi.

Following him were upbeat comments from Chinese Finance Minister Liu Kun who said that the 2023 fiscal revenue will grow this year, though the growth rate will not be too high, per the Chinese state media.

On the same line were fears of witnessing the US debt-ceiling crisis, as warned by the US Congressional Budget Office (CBO) on Wednesday per Reuters, which in turn suggests a faster solution to the big problem in the upcoming days.

It’s worth noting that Wall Street managed to close with mild gains only because of the day-end corrective rebound while the stocks in the Asia-Pacific region trade mixed by the press time, which in turn suggests a cautious mood in the market.

On Wednesday, US Retail Sales growth jumped to 3.0% YoY in January versus 1.8% expected and -1.1% prior. Further, The Retail Sales ex-Autos grew by 2.3% in the same period, compared to analysts' estimate of +0.8%. On the same line, the NY Empire State Manufacturing Index for February improved to a three-month high of -5.8 versus -18.0 expected and -32.9 market forecasts. Alternatively, the US Industrial Production marked 0.0% MoM figures for January, compared to analysts’ estimate of 0.5% and -0.7% previous readings, but failed to push back the hawkish bias surrounding the Federal Reserve’s (Fed) next move.

Following the US data, the market’s bets on the Fed’s next moves, as per the FEDWATCH tool of Reuters, suggest the US central bank’s benchmark rate is to peak in July around 5.25% versus the December Federal Reserve prediction of 5.10% top rate.

Looking ahead, the second-tier US data concerning the housing market, industrial activity and producer prices may entertain traders.

Also read: Forex Today: US Dollar strength continues amid resilient American economy