S&P 500 struggles to support SOTU as yields decline

S&P 500 Futures, GIC Jakarta - The risk profile has been weakening since Wednesday morning as traders are looking for a clear direction regarding the SOTU speech issued by US President Joe Biden. This adds to the market's doubts due to the lack of key data or events.

Even so, S&P 500 stocks have printed a slight decline near 4,170, while cutting the biggest daily surge in nearly a week. Meanwhile, the US 10-year Treasury bond yield has also stopped a three-day uptrend and temporarily retreated from a one-month high of around 3.68 percentage points to 3.66. In his first joint session in Congress since Republicans took over the House of Representatives in January, Joe Biden has shown his readiness to work with the House of Representatives in order to advance the US. Policymakers are also pushing for a minimum tax on billionaires while showing their tough stance on China if the dragon country undermines U.S. sovereignty.

Earlier, Biden tried to ease his concerns about the China-US upheaval. However, China's upheaval over the Pentagon's request has made geopolitics even more tense and tempted US dollar buyers. According to a Pentagon spokesman, China has rejected a U.S. request for a phone call between U.S. Defense Secretary Lloyd Austin and Chinese Defense Secretary Wei Fenghe. On the other hand, mixed comments from US Fed officials and impressive data have challenged the US dollar's gains. That said, Minneapolis Fed President Neel Kashkari said in a CNN interview that they should keep interest rates to higher levels for a long time, adding that he could not yet predict a recession. 

After that, Fed chairman Jerome Powell also predicted that 2023 would be a year of significant inflation decline. Powell also added that if the data continues to come in a stronger direction than expected, then it is certain that Powell will raise interest rates higher. So with this, the DXY remains weak near 103.3, after reversing from the one-month high point of the previous day. Going forward, global markets are also likely to remain weak amid data and key events that are also decreasing following SOTU's current speech. However, the US dollar's decline does not seem convincing after the latest strong jobs and activity reports, which in turn allowed Fed policymakers to remain hawkish and challenge risk appetite. 

Well, that's the explanation of the "S&P 500, February 8, 2023". Also read our other articles, such as an explanation of how to buy cryptocurrencies, only in the GIC Journal. Keep updating other news through the GIC Journal every day to find out more information. Trade on GIC using an ECN account to enjoy trading with low spreads starting from zero!