Forex News

• S&P 500 Futures print mild losses during the bearish consolidation.
• US 10-year Treasury yields pare the heaviest daily jump in a month.
• Concerns over US stimulus, Fed tapering and China entertain traders amid a quiet session.
• Preliminary US Michigan Consumer Sentiment Index for September will offer more clues for next week’s key FOMC.

Global markets lick the previous day’s wounds during early Friday as a light calendar and absence of major catalysts probe momentum. Also, fears of the Fed tapering, US stimulus and geopolitical tension surrounding China weigh on the market sentiment.

That said, risk barometers like S&P 500 Futures print mild losses, carrying their previous bearish bias whereas the rush to risk-safety underpins the US Treasury yields around 1.33% by the press time. With this, S&P 500 Futures drop for the second consecutive day whereas the US 10-year Treasury yields jumped the most in a week the previous day.

Talking about the latest catalysts, a rethink over the Fed’s tapering seems to probe the bears. Reuters’ latest poll of 51 economists pushes back the tapering to the November meeting while citing the inflation concerns. The survey also hints at the Delta covid variant’s downbeat impact on the US Q3 GDP.

Also, chatters over US stimulus, teased by a tweet from Fox News's Chad Pergram added to the confusion. “WH says Biden, Pelosi & Schumer talked today by phone about social spending bill,” tweeted the reporter. Before that, Axios came out with the news saying, “President Biden failed to persuade Sen. Joe Manchin (D-W.Va.) to agree to spending $3.5 trillion on the Democrats' budget reconciliation package during their Oval Office meeting on Wednesday.”

It should be noted that rumors over the US, the UK and the Australian alliance to challenge China, as well as the US hosting of the UK, India, Australia and Japan for diplomatic talks the next week, test the traders. On the same line was news that the US and Australia issue joint statement showing concerns over the South China Sea claims while conveying readiness to strengthen ties with Taiwan.

On Thursday, bets over the US Federal Reserve’s (Fed) tapering regained life after the US Retail Sales for August and Philadelphia Fed Manufacturing Index for September came in better than expected and prior. That said, The US Retail Sales MoM jumped to the highest in five months while crossing expectations of -0.8% with +0.7% figures. Further, the Philly Fed gauge also rose strongly to 30.7 versus 19 forecast and 19.4 prior, marking the strongest figures in three months.

Moving on, fears of the tapering announcement during the next week’s Federal Open Market Committee (FOMC) may keep markets in check but today’s preliminary readings of the US Michigan Consumer Sentiment Index for September, expected 72.2 versus 70.3 prior, may offer intermediate directions.

Read: US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs