S&P500 Futures retreat from 14-month high, yields pare recent losses on sluggish Friday

• Market sentiment remains dicey as traders reassess previous risk-on mood, central bank bias ahead of BoJ.
• S&P500 Futures print mild losses at the highest levels since April 2022, poked the previous day.
• US Treasury bond yields lick their wounds after a downbeat daily performance.
• Central bank talks, US data awaited for clear directions but risk-on mood is likely to fade.

Traders take a breather during early Friday, paring recent optimism after a volatile Thursday, amid a light calendar and wait for the key Bank of Japan (BoJ) monetary policy meeting, as well as the mid-tier US data. It’s worth noting that the easing hawkish bets on the Fed and mixed US data joined the downbeat yields to propel the market sentiment the previous day.

While portraying the mood, S&P500 Futures print mild losses at the highest levels since April 2022, down 0.23% intraday at 4,460 by the press time. That said, the US 10-year Treasury bond yields snap a two-day downtrend near 3.74% at the latest.

It’s worth noting that the S&P500 Futures and Nasdaq both jumped to the highest levels in 14 months the previous day while Dow Jones led the winning streak with 1.26% intraday gains to around 34,408 by the end of Thursday.

If we check the catalysts, the broad US Dollar slump amid mixed data and doubts about the July rate hike gained major attention. Also previously favoring the risk-on mood could be the headlines from China and Europe.

That said, the US Dollar Index (DXY) dropped the most in three months while poking the lowest levels since May 12, to 102.15 at the latest.

Talking about the US data, US Retail Sales growth marks an increase of 0.3% for May versus -0.1% expected and 0.4% previous readings while the Core readings, mean Retail Sales ex Autos, match 0.1% market forecasts for the said month, compared to 0.4% prior. Further, NY Fed Empire State Manufacturing Index jumps to 6.6 in June versus -15.1 expected and -31.8 prior whereas Philadelphia Fed Manufacturing Index drops to -13.7 for the said month from -10.4 prior and compared to -14 market forecasts. Additionally, US Industrial Production for May cools down to -0.2% against 0.1% estimated and 0.5% prior while Initial Jobless Claims reprints the upwardly revised figures of 262K for the week ended on June 09 versus 249K expected.

On the other hand, the hawkish performance of the European Central Bank (ECB), via 25 basis points (bps) interest rate hike and clues of more such moves ahead, joined the People’s Bank of China (PBoC) rate cut to also favor the market’s upbeat mood.

It’s worth noting that the CME FedWatch Tool’s 67% print for the July rate hike joins previously released downbeat China data and the market’s reassessments of the Fed’s hawkish halt to prod the optimists of late.

Moving on, the Bank of Japan (BoJ) monetary policy meeting announcements will be key to watch for immediate directions. Following that, the final readings of Eurozone inflation data for May, as per the Harmonized Index of Consumer Prices (HICP) details, will precede the preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June and five-year inflation expectations to entertain traders.

Also read: Forex Today: Dollar tumbles, ECB hikes, and BoJ unlikely to tweak