S&P 500 Futures print mild gains as Treasury bond yields lick Credit Suisse-inflicted losses

• Markets consolidate Credit Suisse-infused fears as global policymakers rush to placate fears of financial crisis.
• S&P 500 Futures rise 0.45% to reverse the previous day’s losses as Credit Suisse eyes SNB loan to strengthen liquidity.
• US 10-year, two-year Treasury bond yields seesaw around multi-day low marked the previous day.
• ECB, risk catalysts should be observed for fresh impulse, bond market moves are the key.

The risk profile improves a bit, stabilizing after the previous day’s heavy risk-off mood, as global policymakers rush to placate the Credit Suisse-linked financial market fears.

Adding strength to the cautious optimism could be the latest headlines suggesting the European bank’s efforts to regain liquidity by taking loans from the Swiss National Bank (SNB). “Credit Suisse to borrow up to CHF50 billion from SNB to strengthen liquidity,” said Reuters.

While portraying the mood, the S&P 500 Futures rise half a percent to reverse the previous day’s losses around 3,940 whereas the US 10-year Treasury bond yields stabilize around 3.49% after falling the most in four months on Wednesday. That said, the two-year Treasury bond coupons also pause the further downside around 3.96%, after falling to the lowest levels since September 2022.

The Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. On the same line was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse, which in turn fanned the risk-off mood.

To tame the risk aversion, the Swiss National Bank stepped forward while anonymous sources conveyed to Reuters that the US banks are less vulnerable to the Credit Suisse debacle. On the same line, the Bank of England (BoE) also held emergency talks. Furthermore, market chatters suggesting no immediate negative reaction by the Federal Reserve (Fed) and ECB, during their monetary policy meetings, also seem to tame the previous risk aversion.

It’s worth mentioning that the US data came in mixed the previous day but failed to gain major attention amid the Credit Suisse crisis. That said, US Retail Sales dropped to -0.4% in February versus -0.3% expected and upwardly revised 3.2% prior while the Producer Price Index (PPI) slide to 4.6% YoY from 5.7% in January and 5.6% market forecasts. Further, NY Empire State Manufacturing Index dropped to -24.6 for March compared to analysts’ estimations of -8.0 and -5.8 prior.

To sum up, challenges emanating from the US and European banks to the financial markets weigh on the Treasury bond yields and allow the US Dollar, as well as the Gold price, to remain firmer despite the latest retreat.

Looking ahead, ECB Monetary Policy Meeting will be the day’s key event to watch clear directions. Also important to watch will be the bond market moves and headlines surrounding Credit Suisse, Silicon Valley Bank (SVB) and Signature Bank.

Also read: Forex Today: Dollar and Yen jump as panic takes over markets