S&P 500 Futures recover, Treasury bond yields retreat as IMF revises up global growth forecasts

  • Market sentiment improves a bit amid Covid-linked headlines, hopes of economic recovery.
  • IMF revises up global growth forecast, China PMIs came in firmer.
  • US President Biden’s Administration braces for ending the Covid-led emergencies by May 11.
  • US CB Consumer Confidence, risk catalysts eyed for intraday move, Fed is the key.

Risk profile improves during early Tuesday, after a sour start to the key central bank week, as hopes of economic growth and easing Covid woes allowed traders to better brace for the top-tier data/events. Adding strength to the cautious optimism could be the upbeat China activity data.

That said, the International Monetary Fund (IMF) recently raised its global growth estimates while saying that the emerging markets’ growth slowdown bottomed out in 2022. The global lender also stated that estimates come with the backdrop of a slight increase in the 2023 global growth outlook helped by “surprisingly resilient” demand in the United States and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions.

Also read: IMF raises growth forecasts as gas prices fall and China reopens

Earlier in the day, China’s NBS Manufacturing PMI rose to 50.1 versus 49.7 market forecasts and 47.0 prior whereas Non-Manufacturing PMI also came in upbeat with 54.4 figure compared to 51.0 expected and 41.6 previous readings.

On the same line, news suggesting US President Joe Biden’s administration’s readiness to revoke the Covid-led emergencies from May 11 appeared to have favored the risk-on profile of late. On Monday, China’s Center for Disease Control and Prevention (CDC) said, reported by Reuters, “China’s current wave of COVID-19 infections is nearing an end, and there was no significant rebound in cases during the Lunar New Year holiday.”

Against this backdrop, the S&P 500 Futures print mild gains despite downbeat Wall Street performance whereas the US 10-year Treasury yields retreat to 3.54% after posting a three-day winning streak in the last.

Even so, anxiety ahead of this week’s key central bank meetings and earnings reports from the equity heavyweights like Amazon, Alphabet, Apple and Meta seems to challenge the market’s optimism.

Moving on, the US fourth-quarter (Q4) US Employment Cost Index (ECI) and the Conference Board’s Consumer Confidence gauge for January will be eyed for clear directions. It should be noted that the US Consumer sentiment gauge to improve but a likely softer print of the US ECI, to 1.1% from 1.2% could strengthen the dovish bias surrounding the Fed and probe the Kiwi pair bears. However, major attention will be given to Wednesday’s Federal Open Market Committee (FOMC) monetary policy meeting.