- Global markets remain tight amid light calendar, early week optimism defends buyers.
- S&P 500 futures fall for the third day in a row.
- 10-year US Treasury yields are hovering around 14-year highs.
Traders liven up the mood on Friday as a lack of major data/events joins mixed catalysts to keep them off the table for the final day of the week. Still, cautious optimism prevails as the US dollar struggles to benefit from strong yields and a state of risk aversion.
10-year US Treasury yields updated to a 14-year high the day before, around 4.22% at press time. Likewise, two-year yields rose to the highest levels since 2007 before recently hovering around 4.62%.
That said, Wall Street closed in the red after initially bullish behavior, while S&P 500 futures extended losses from the previous day with an intraday retracement of 0.50% at most.
“US stocks closed lower on Thursday as labor market data and comments from a US Federal Reserve official reinforced expectations that the central bank will be aggressive in raising rates. interest rates, detracting from a wave of strong corporate profits,” Reuters said.
As for the data, US initial jobless claims fell to 214,000 in the week ended Oct. 7, versus 230,000 expected and 226,000 previously revised down. In addition, the Philadelphia Fed manufacturing index fell to -8.7 in October, compared to -5 in the market consensus and -9.9 in the previous reading. US existing home sales rose above the 4.7 million expected to 4.71 million, but dipped below the previous 4.78 million.
Additionally, Federal Reserve Governor Lisa Cook mentioned that continued rate hikes will be required.
In the midst of these plays, the CME FedWatch Tool Suggests Close to 98% Probability of 75bp Fed Rate Hike.
Elsewhere, the political crisis in the UK and Japan’s reluctance to intervene despite the yen’s multi-year low put downward pressure on markets. However, China’s willingness to ease Covid-induced travel restrictions appears to defend shoppers. Along the same lines could be placed the hopes that Great Britain will soon overcome the nervousness of the markets.
Source: Fx Street
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