S&P 500 Futures gain 1.0%, yields rebound as SVB, Signature Bank woes fade

• Market sentiment improves as US regulators manage to tame fears emanating from Silicon Valley Bank, Signature Bank.
• S&P 500 Futures rebound from the lowest levels in nine weeks.
• US two-year Treasury bond yields pare the biggest daily loss in nine months around 4.52%.
• US inflation, consumer-centric data eyed amid Fed blackout period.

Markets witness a risk-on mood during early Monday, following a show of heavy pessimism the previous day, as the US policymakers take steps to tame financial risks emanating from the Silicon Valley Bank (SVB) and Signature Bank.

While portraying the mood, S&P 500 Futures bounced off a 2.5-month low, up nearly 1.0% around 3,905 by the press time whereas the US Treasury bond yields recover from the monthly low. That said, the benchmark 10-year Treasury bond coupons rise nearly five basis points (bps) to 3.74% as it pares the biggest daily loss in four months. More interestingly, the two-year Treasury bond yields consolidate the heavy daily slump since June 2022 around 4.52% by the press time. It should be noted, however, that shares in the Asia-Pacific region are still in the red, despite recovering in the last hour, as they were left to react on Friday’s equity market rout.

US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) took joint actions to tame the risks emanating from the SVB and Signature Bank during the weekend.  “All depositors of Silicon Valley Bank and Signature Bank will be fully protected,” said the authorities in a joint statement released a few minutes back.

While reacting to the US regulators’ actions, US President Joe Biden said, “American people and American businesses can have confidence that their bank deposits will be there when they need them.”

Although the US policymakers manage to renew the risk-on mood, fears emanating from the Federal Reserve’s (Fed) stronger rate hikes, especially after Friday’s mostly upbeat data and the previous week’s hawkish testimony from Fed Chair Powell, weigh on the sentiment. That said, the US Nonfarm Payrolls (NFP) grew more than 205K expected to 311K in February, versus 504K (revised), while the Unemployment Rate rose to 3.6% for the said month compared to 3.4% expected and prior. Further, the Average Hourly Earnings rose on YoY but eased on monthly basis for February whereas the Labor Force Participation increased during the stated month.

Looking ahead, US President Biden's speech on Monday will precede Tuesday’s US Consumer Price Index (CPI) for February to direct immediate market moves. Following that, the Retail Sales and preliminary readings of the Michigan Consumer Sentiment Index for March, up for publishing on Wednesday and Friday, will be crucial for clear directions.