S&P 500 Futures refresh monthly low as US Treasury yields drop to four-month bottom
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S&P 500 Futures refresh monthly low as US Treasury yields drop to four-month bottom

  • S&P 500 Futures extend Friday’s drawdown to the fresh low since May 20.
  • US 10-year, 30-year Treasury yields extend south-run to February levels.
  • Fed rate hike fears join slump in US inflation expectations to weigh on the market’s mood.
  • ECB, Fed policymakers’ speech eyed for fresh impulse.

S&P 500 Futures remain offered around 4,128, down 0.60% intraday, amid early Monday. The risk barometer bears the burden of downbeat US Treasury yields, as well as the inflation expectations, amid a quiet start to the week.

Both the key Treasury yield benchmarks of the US, namely 10-year and 30-year bonds, extend the early Asian south-run to a fresh low since February, suggesting a further flattening of the yield curve. That said, The US 10-year Treasury yield drops six basis points (bps) to 1.389%, the lowest in four months whereas the 30-year bond yield extends the previous two-day south-run to the mid-February lows, near 1.96% by the press time.

It’s worth noting that the US inflation expectations, per the 10-year breakeven inflation rate data from the St. Louis Federal Reserve (FRED), dropped to the lowest since early March, around 2.24%, by the end of Friday’s closing.

Weigh on the Treasury yields and market sentiment could be comments from the St. Louis Fed President James Bullard, published Friday, as he was the first US banker to cross the wires after the hawkish Federal Open Market Committee (FOMC). The non-voting member of the Fed forecasts Core PCE at 3.0% for 2021 and 2.5% for 2022 while backing the tapering to start next year.

On a different page, a lack of progress over the US President Joe Biden’s infrastructure and spending package, as well as fears of the covid’s Delta variant resurgence, also weigh on the market sentiment.

The same risk-off mood also drowns Asia-Pacific equities with Nikkei 225 leading the losses by 3.30% intraday loss.

Moving on, a lack of major data/events could keep markets directed towards the central bankers’ comments for fresh impulse. Hence, today’s speeches from ECB President Christine Lagarde and New York Fed President John C. Williams will be the key to follow.

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