S&P 500 Futures, yields portray cautious mood as Fed talks eyed to confirm US soft landing

• Risk profile remains downbeat amid hawkish Fed concerns, China woes.
• US data advocates soft landing but more clues, multiple Fed policymakers’ speeches eyed for confirmation.
• China figures remain dismal and weigh on sentiment even as stimulus hopes prod bears of late.
• Fears of witnessing slower economic growth, recession in China, UK and Eurozone spread pessimism of late.

The market sentiment remains downbeat despite lacking momentum during early Thursday.

While portraying the mood, S&P 500 Futures remain pressured at the lowest level in a week, down for the fourth consecutive day while posting mild losses around 4,468 by the press time. That said, the US 10-year Treasury bond yields seesaw near the two-week high registered the previous day around 4.30%, near 4.29% at the latest, whereas the two-year counterpart prints the first daily loss in four by retreating from the weekly top to 5.01% as we write.

With this, the US Dollar Index (DXY) struggled at the highest level in six months, indecisive at 104.85 at the latest, whereas prices of Gold and WTI Crude Oil trade mixed.

The traders wait for China’s headline foreign trade numbers for August and multiple Federal Reserve (Fed) officials’ speeches seem to restrict the market’s momentum of late. However, fears about the economic slowdown in China, the Eurozone and the UK contrast with the US soft landing concerns to defend the risk-off mood.

China’s early-week disappointment via China Caixin Services PMI joined the market’s lack of confidence in the Dragon Nation’s stimulus to weigh on the concerns about Beijing. On the same line could be the US-China tension surrounding the trade conditions and Taiwan. Furthermore, the latest economics from the Eurozone and the UK, as well as statements from the European Central Bank (ECB) and the Bank of England (BoE) officials, have been portraying a downbeat economic picture of the Eurozone and Britain and contributing to the risk aversion.

On the contrary, strong US activity and output data join the hawkish Federal Reserve (Fed) signals to highlight the US Dollar as the market’s favorite. On the same line could be the Fed’s Beige Book suggesting a soft landing in the US.

Looking ahead, the weekly US Initial Jobless Claims and the quarterly readings of Nonfarm Productivity, as well as the Unit Labor Costs for the second quarter (Q2) will decorate the calendar and should also be important to watch for clear directions above all, headlines about China, Federal Reserve (Fed) and soft landing will be crucial to watch for a clear guide. 

Also read: Forex Today: US Dollar holds firm on risk aversion and US figures; China trade data next