S&P 500 Futures grind higher past 4,000, Treasury yields stay pressured on mixed bank, geopolitical news

• Market sentiment stays cautiously optimistic amid sluggish week-start.
• S&P 500 Futures stay mildly bid after two-week uptrend, yields remain weak for the fourth consecutive week.
• Shift in Russia’s nuclear amenities to Belarus, talks of an SVB deal trouble traders amid light calendar.
• Dovish remarks from Fed’s Kashkari, mixed US data allow risk markets to grind higher, Fed’s favorite inflation gauge eyed.

Risk profile remains mildly positive after a volatile week as traders hope the policymakers’ efforts to tame banking turmoil would push back fears suggesting the return of the 2008 financial crisis. Adding strength to the cautious optimism are the recent comments from the central bankers who sounded less hawkish. Above all, a light calendar and a lack of major macros allowed traders to extend the previous weekly moves ahead of the key US inflation clues, namely the Core Personal Consumption Expenditure (PCE) Price Index, up for publishing on Friday.

While portraying the mood, US Treasury bond yields struggle to keep the three-week downtrend as benchmark bond coupons remain directionless around the latest multi-day lows marked in the last week. However, the S&P 500 Futures print mild gains around 4,010 at the latest and traces Wall Street’s gains to suggest a mildly positive risk appetite.

Among the major headlines, Bloomberg’s news surrounding the Silicon Valley Bank (SVB) seemed to have contributed to the risk-on mood. “First Citizens BancShares Inc. is in advanced talks to acquire Silicon Valley Bank after its collapse earlier this month, according to people familiar with the matter,” said Bloomberg.

On the same line were comments from Minneapolis Fed President Neel Kashkari who flagged fears of US recession and tamed calls of more rate hikes from the US central bank.

Alternatively, news about Russia’s shifting of nuclear weapons near Belarus join the mostly upbeat US data and the previously hawkish Fed speak to weigh on sentiment. “The North Atlantic Treaty Organization (NATO) NATO on Sunday criticized Vladimir Putin for what it called his ‘dangerous and irresponsible’ nuclear rhetoric, a day after the Russian president said he planned to station tactical nuclear weapons in Belarus,” per Reuters.

As per the latest US data, Durable Goods Orders for February dropped by 1.0% versus January's fall of 5% (revised from -4.5%) and the market expectation for an increase of 0.6%. Details suggested that the figure for Durable Goods Orders ex Defense and ex Transportation were also downbeat but Nondefense Capital Goods Orders ex Aircraft came in firmer-than-expected 0.0% to 0.2%, versus 0.3% prior. Moving on, the preliminary readings of the US S&P Global PMIs for March came in firmer as the Manufacturing gauge rose to 49.3 from 47.3 in February, versus 47.0 expected, while Services PMI rose to 53.8 from 50.6 prior and 50.5 expected. With this, the S&P Global's Composite PMI increased to 53.3 from 50.1 in February, versus 50.1 market forecasts.

It should be noted that the Atlanta Fed President Raphael Bostic told NPR that it was not an easy decision to raise the policy rate while also adding that he is not expecting the economy to fall into recession. Further, St. Louis Federal Reserve President James Bullard, a policy hawk, said on Friday that the response to the bank stress was swift and appropriate, allowing the monetary policy to focus on inflation, per Reuters. The policymaker also added that the projections suggest one more rate hike that could be at the next FOMC meeting or soon after.

Also read: Forex Today: Mixed week for the USD; is it time for some consolidation?