S&P 500 Tracks Wall Street Gains Amid Weak Yields

Today's forex news is about the S&P 500 tracking gains from Wall Street despite sluggish treasury yields. Global traders seem less interested in marking big moves as a volatile February comes to an end.

However, mixed US data and positive risk-off headlines allowed bears to take a breather during a sluggish Asian session on Tuesday. Based on information we summarize directly from fxstreet.com, S&P 500 Futures posted mild gains around 3,995 and extended their early-week rebound from monthly lows. The 2-year US Treasury yield is hovering near 4.79% after reversing from a three-month high on Monday. That said, the 10-year US Treasury bond coupon is looking for a clear direction near 3.92% after a downbeat start to the week. Market sentiment was improving on Tuesday, with headlines suggesting the US is offering an olive branch to Chinese companies despite political differences with the country. This allowed the S&P 500 to track gains from Wall Street.

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A Politico report on Monday evening said that despite the troubled relationship between the two countries, US President Joe Biden is expected to lift broad new restrictions on American investment in China, defying calls by some hawks in his administration and Congress. Also underpinning the cautious optimism are hopes for an upbeat US earnings season given upbeat employment and inflation figures. It is worth noting that mixed US data since Monday has put downward pressure on US yields, allowing equity traders to remain optimistic. Talking about data, US Durable Goods Orders fell by -4.5% in January versus the previous reading, which was -4.0% from the previous expectation of 5.1%. However, Non-Defense Capital Goods Orders ex-Aircraft grew by 0.8% versus analysts’ expectations of 0.0% and -0.3% in the previous reading. On the same line, US Pending Home Sales also rose by 8.0% month-on-month versus 1.0% from the previous expectation of 1.1%. Elsewhere, the talk of Chinese inflation, supported by daily securities and UK PM Rishi Sunak’s ability to deliver a Brexit deal after months of inaction, also seems to be supporting the market’s risk appetite. The talk of second-tier US data will be crucial for intraday direction such as the Conference Board Consumer Confidence, the CGI Purchasing Managers’ Index and the Richmond Fed Manufacturing Index for February, and the US preliminary trade figures for January. However, the main focus will be on risk catalysts.