S&P 500 Futures, US Treasury yields step back on covid fears, Jackson Hole anxiety

• S&P 500 Futures snap five-day uptrend, US 10-year Treasury yields consolidate the biggest daily jump in three weeks.
• Virus woes escalate in Asia­–Pacific, economic fears regain momentum.
• US data, Fed Chair Powell’s Jackson Hole appearance eyed.

Market sentiment turns sour in the run-up to the week’s key data/events during early Thursday and the coronavirus woes are to blame.

While portraying the mood, S&P 500 Futures drop 0.15% intraday to 4,486, declining for the first time in six days, whereas the US 10-year Treasury yields also pause the run-up to 1.35%, down 0.2 basis points (bps) around 1.342% at the latest. It’s worth noting that the bond coupon jumped the most since August 06.

Despite the global push for faster jabbing and approvals to the vaccines, COVID-19 fears aren’t off the table. Recently, Australia’s most populous state New South Wales recorded all-time high infections, coupled with New Zealand’s record daily covid cases. Figures from China are also higher than the previous ones and the West also marks a grim stand over the coronavirus. On the same line, a study developed in the UK showed that protection from covid jabs wane after six months whereas Johnson & Johnson is recommending a second shot to boost immunity to its one-dose vaccine.

Read: Coronavirus Update: Australia refreshes record infections, figures from NZ, China are up as well

It should be noted that headlines suggesting Sino–American dialogue for peace over equity trading and chatters over Beijing’s lost economic momentum, conveyed by Bloomberg, were additional filters to the market sentiment.

Above all, the market’s cautious ahead of the Jackson Hole Symposium, not to forget the US Personal Consumption Expenditure (PCE) Inflation data and second reading of the US Q2 GDP, become the key burden on the risk appetite. That said, downbeat US Durable Goods Orders for July and US Health Official Anthony Fauci’s expectations of getting the COVID-19 conditions under control by early 2022, backed by strong jabbing, favored the bulls the previous day.

However, the Fed policymakers aren’t far away from their tapering talks and hence the fears that Fed Chairman Jerome Powell will disappoint markets keep hurting the sentiment.

Read: Jackson Hole positioning