- Market sentiment remains sours as Fedspeak hints at aggressive rate hikes, Ukraine-Russia crisis worsens.
- US 10-year Treasury yields seesaw around May 2019 top after refreshing multi-day peak.
- S&P 500 Futures track Wall Street losses but Nikkei 225 stays firmer after an extended weekend.
Hawkish Fedspeak adds to the market’s risk-off mood, joining the Kyiv-Moscow tussles, which in turn propels the US Treasury yields while weighing on the S&P 500 Futures during Tuesday’s Asian session.
That said, the US 10-year Treasury yields rallied to the fresh high since May 2019 after rising almost 15 basis points (bps) to 2.32%, around 2.313% by the press time. Further, the S&P 500 Futures print mild losses around 4,442 at the latest. Japan’s Nikkei 225, however, prints 1.50% daily gains by the press time on hopes of over 10 trillion yen stimulus, backed by Japanese media Sankei.
Atlanta Fed President Bostic and Richmond Fed’s Barkin initially promoted the US central bank’s ability to restrain inflation, indirectly signaling a faster pace of the rate hike. However, the comments from Fed Chair Jerome Powell who said, “The Fed will raise rates by more than 25bps at a meeting or meetings if necessary,” offered a major upside momentum to the T-bond coupons.
Also fueling the US Treasury yields were firmer prints of the US Chicago Fed National Activity Index for February, which rose to 0.51 versus 0.29 expected.
Elsewhere, the worsening conditions of the Ukraine-Russia crisis after Kyiv rejected Moscow’s demand of surrendering in Mariupol. Recently, Ukraine President Volodymyr Zelenskyy mentioned that no immediate decision is possible on occupied Ukrainian territory per Interfax. Additionally, US President Joe Biden also cited fears of a cyberattack against the US.
Looking forward, US President Biden’s meeting with the North Atlantic Treaty Organization (NATO) allies on Thursday will be crucial, as well as comments from various Federal Reserve (Fed) policymakers, for the market players.
It’s worth noting that the preliminary readings for March month’s PMIs and the US Durable Goods Orders for February will join the Ukraine-Russia headlines to become additional catalysts.