- Market sentiment remains unclear amid China LNY holidays, Fed blackout.
- Mixed data from Australia, New Zealand and Japan fail to offer clear directions.
- US two-year, 10-year Treasury bond yields struggle to defend three-day uptrend.
- S&P 500 Futures retreat from multi-day high, fails to track Wall Street.
Tuesday appears to be another lackluster day for the markets as mixed statistics join China’s absence from the markets, as well as the Fed blackout, to challenge the momentum traders during early Tuesday.
While portraying the mood, the S&P 500 Futures resist following Wall Street’s gains while retreating from the six-week high marked the previous day, making rounds to 4,030-35 at the latest. On the same line, the US 10-year and two-year Treasury bond yields snap three-day recovery moves by struggling around 3.51% and 4.21% by the press time. Furthermore, prices of Gold and Oil print mild gains while the US Dollar Index (DXY) retreat.
That said, the first readings of January’s activity data from Japan, Australia and New Zealand came in mixed, mostly positive, which in turn pushed back the looming recession fears.
However, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data rise for the third consecutive day, to 2.28% each, which in turn justify the pre-blackout hawkish Fed comments and challenge the sentiment.
Furthermore, news that the US confronts China over companies’ ties to the Russian war effort, shared by Bloomberg, joins the talks surrounding the US debt ceiling in the Senate to probe the market optimists.
Moving on, the talks of a 50 bps rate hike from the European Central Bank (ECB) and the hawkish concerns surrounding the Bank of Japan (BoJ) also weigh on the risk appetite.
Alternatively, receding woes of the impending economic slowdown and China-linked optimism in the market keep the traders positive. Additionally favoring the sentiment could be the dovish bias surrounding the US Federal Reserve (Fed), as well as the softer US data of late.
It’s worth noting that the cautious mood ahead of the first readings of January’s S&P Global PMIs and the fourth-quarter (Q4) Gross Domestic Product (GDP) for the US seems to challenge the momentum traders amid China Lunar New Year (LNY) holidays and the Fed silence.