- Market sentiment remains mildly positive amid a light calendar and mixed updates.
- Fed policymakers defend higher rates by citing inflation woes.
- US diplomatic stand concerning China tames the geopolitical fears and helps build cautious optimism.
The risk profile appears positive during early Thursday, even as the market’s activity remains dismal.
While tracing the main catalysts, the hawkish central bankers, contradicting geopolitical updates, and hopes of no economic slowdown gain major attention amid an absence of major data/events during the Asian session.
On Wednesday, policymakers from the European Central Bank (ECB) and the Federal Reserve (Fed) tried defending higher rates and showed readiness for further aggression by citing inflation fears. Among them, comments from Fed Governor Christopher Waller and ECB policymaker Klaas Knot gained significant attention. It’s worth noting, however, that the officials from the Bank of Canada (BoC) and Bank of Japan (BoJ) refrained from joining the hawks and confused traders.
Elsewhere, the US diplomats also highlighted concerns that defend the higher Fed rates and challenge risk-takers. US Treasury Secretary Janet Yellen mentioned, “While inflation remained elevated, there were encouraging signs that supply-demand mismatches were easing in many sectors of the economy.” Elsewhere, US President Joe Biden said during a PBS interview that there will be no US recession in 2023 or 2024.
On a different page, easing fears surrounding the US and China tension over the balloon shooting seems to have joined the lack of significant negatives from elsewhere to underpin the mildly positive mood.
Against this backdrop, the US 10-year Treasury bond yields reversed from a one-month high to snap a three-day uptrend on Wednesday, pressured around 3.61% at the latest. The same helped S&P 500 Futures to ignore Wall Street’s downbeat closing and remain mildly bid as of late.
Looking forward, hawkish central bank bias, inflation fears and growth talks could entertain market players amid an absence of major data/events. Also important to watch will be the US Weekly Initial Jobless Claims.