S&P500 Futures edge higher, yields stabilize after stellar moves, focus on central bankers

• Markets remain cautiously optimistic as key data/events loom.
• Receding fears of hawkish central bank actions fuelled risk-on mood the previous day.
• S&P500 Futures grind at weekly top after rising the most in a month
• US 10-year Treasury yields lick wounds following the biggest daily loss in three weeks.

The risk appetite remains slightly positive, struggling to defend the previous day’s optimism, as market players brace for this week’s top-tier data/events. That said, the start of a two-day-long annual Jackson Hole Symposium and the US Durable Goods Orders, as well as the second-tier housing and activity data, are the key catalysts probing the optimists of late, especially amid a light calendar and dead news line.

While portraying the mood, S&P500 Futures rose half a percent to 4,470 despite lacking upside momentum of late. That said, the benchmark equity futures gauge rose the most in a month the previous day after traders cheered downbeat prints of the global PMIs for August.

On the same line, the US 10-year Treasury bond yields seesaw around 4.20%, pausing a two-day losing streak from the highest level since 2007, following the biggest daily slump in three weeks.

It’s worth noting that the mostly downbeat Purchasing Managers Index (PMI) for August from the top-tier economies restored the market’s previous concerns about the central bank policy pivot and favored the risk-on mood. Additionally keeping the traders positive were the upbeat headlines surrounding the US-China trade ties.

As per preliminary readings of the US S&P Global Manufacturing PMI dropped to 47.0 for August from 49.0 versus 49.3 market forecasts whereas the Services counterpart also edged lower to 51.0, compared to 52.2 expected and 52.3 marked the previous month. With this, the S&P Global Composite PMI for the US eased to 50.4 for the said month from 52.0 prior and the analysts’ estimations. Further, US New Home Sales change rose to 4.4% MoM for July versus -2.5% previous readings.

Not only in the US but the first activity readings from the UK, Australia, Eurozone and Germany were all downbeat and challenged the hawkish central bank bias, which gained attention the late July and weighed on the sentiment. It’s worth observing that Japan’s PMI improved but the Bank of Japan (BoJ) is already defending its ultra-easy monetary policy and there’s no harm for bulls there.

On a different page, US Commerce Secretary Gina Raimondo’s visit to Beijing, scheduled for next week, adds strength to the firmer sentiment. On the same line are the early-week news suggesting the US removal of 27 Chinese entities from its Unverified List, lifting sanctions from those entities and flagging hopes of improving diplomatic ties. Additionally, improvements in technology stocks on Wall Street and overall equities also portrayed the market’s optimism.

Looking forward, the US Durable Goods Orders, Chicago Fed National Activity Index, Kansas Fed Manufacturing Activity and weekly Jobless Claims will decorate the calendar. However, major attention will be given to the start of the two-day-long annual Jackson Hole Symposium for clear directions.

Also read: Forex Today: Global PMI disappoint as USD corrects lower