- S&P 500 Futures refresh intraday low, stays near record top.
- US Treasury yields remain sluggish amid Fed tapering tantrums, rate hike woes.
- Fed reshuffle, China-linked headlines add to the sour sentiment amid light calendar.
S&P 500 Futures take offers around 4,680 to portray mild risk-off mood during early Tuesday. Even so, the risk barometer remains near the all-time high reported last week.
The US Federal Reserve (Fed) officials reiterate their bullish bias during the latest Fedspeak, underpinning the rate hike concerns and challenging the equity bulls. However, a few of the Fed board members are likely to leave the US central bank the next year and the list may include Chairman Jerome Powell if he isn’t re-elected.
Fed policymakers ranging from Vice-Chairman Vice-Chair Richard Clarida to Charles L. Evans, the Chief Executive Officer of the Federal Reserve Bank of Chicago, recently tried to convince the markets that the inflation fears are transitory. However, Fed’s Powell removed that mention during his last week’s speech and Fed’s Evans also highlighted the recent jump in the US inflation expectations to unveil hopes for a rate hike in 2022.
That said, US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, jump to the fresh high since October 27 by the end of Monday’s North American trading. In doing so, the gauge extends the previous week’s rebound from the lowest levels since October 12 to flash 2.62%, per the official website data.
It should be noted that the chatters that China’s National Development and Reform Commission (NDRC) has held a meeting with property developers and banks in Shenzhen, per Reuters, also weigh on the sentiment. Furthermore, the market’s wait for US President Joe Biden’s $1.75 trillion stimulus also challenges the optimists amid a sluggish start to the week.
Moving on, Fedspeak and US stimulus headlines can keep directing short-term moves while today’s speech from Fed Chairman Powell will be the key for fresh impulse. Should the Fed Boss refrain from terming inflation as ‘transitory’, as he did the last time, risk appetite may witness further weakness.