S&P 500 Futures, US Treasury yields print mild gains with eyes on full markets

• S&P 500 Futures edge higher around record top, US 10-year Treasury yields portray positive week-start.
• Market sentiment improves on easing covid numbers, receding chatters over monetary policy tightening.
• US, Canada markets open after Labour Day holiday, post-NFP full day reaction will be important.
• ECB becomes the week’s key event, virus updates are important too.

Market sentiment remains cautiously optimistic during early Tuesday as traders await the opening of the US and Canadian bourses after an extended weekend. The risk appetite improves on easing concerns over the monetary policy adjustments and recently softening coronavirus numbers, as well as hopes of faster jabbing.

While portraying the mood, the US 10-year Treasury yields begin the week on a positive note, up 2.2 basis points (bps) to 1.343%. On the other hand, S&P 500 Futures print 0.10% intraday gains around 4,538, keeping the recent grind to the north around the all-time high.

A third day of easing virus infections in Australia, around 1,470 at the latest, joins Tokyo’s first below 1,000 daily cases in seven weeks to portray the improving conditions. Also marking the softer COVID-19 data are the nations like New Zealand and China. However, the UK’s jump in cases contrasts with the easing death tolls and mixed updates from the US to confuse the market plays.

Elsewhere, the pandemic-led local lockdowns have tamed talks over the monetary policy consolidations at the Fed, ECB and the RBA. The last Friday’s US employment data underpinned the hopes of further easy money policies and renewed market optimism.

Though, the policymakers at the European Central Bank (ECB) are divided over the reduction in the weekly bond purchase and hence may surprise the markets, making Thursday’s meeting the event of the week.

It’s worth noting that the US and Canadian markets were off the previous day and hence the return of the key Western traders will be watched closely for near-term direction. More importantly, the full-day reaction to Friday’s US Nonfarm Payrolls (NFP) and the latest covid updates, not to forget vaccine optimism, will also be important to track.

Read: Fed adapts forward guidance, will ECB do the same?