In the midst of nervous markets, the S&P 500 Futures pull down from a record high.
Sentiment is weighed down by uncertainty about the Fed’s next movements, covid fears, and pre-data caution.
Prior to the FOMC minutes, the ISM Services PMI will be monitored to confirm inflation pressure.
As risk appetite dwindles early Tuesday, the S&P 500 Futures appear fatigued after an eight-day advance to the record high. Nonetheless, the sentiment gauge is hovering around the all-time high of 4,350, which was flashed today.
The return of US traders and a cautious atmosphere ahead of the ISM Services PMIs, together with the coronavirus (COVID-19) troubles, could be regarded as the main drivers of the recent market gloom. The Fed’s hesitation about its next measures, following Friday’s mixed US jobs report, could also be contributing to the gloomy mood.
Full markets recalculate the chances of a Fed rate hike and, as a result, remain on the sidelines until more details on inflation pressure in the US are released. Worries about a new covid variety, Epsilon, that is resistant to immunizations, as well as worsening covid conditions in Australia and Japan, are also putting the market bulls to the test.
The UK and Germany, on the other hand, measured optimism about the COVID-19 and the resulting signal for unlock, as well as travel limitations, which keeps buyers hopeful. In addition, the bears’ arrival is being hampered by rising immunization rates in developing economies.
Above all, the recovery in US Treasury rates appears to be a frontline attack on the S&P 500 Futures. By the time of publication, the 10-year coupon had increased by 1.4 basis points (bps) to 1.44 percent.
Investors will be watching Eurozone statistics for new impetus in the coming months, but US ISM PMIs will be the most important. If the details continue to provide good surprises, the Fed will react by weighing in on market sentiment.
Check out the ISM Services PMI Preview: Why may the inflation component be the catalyst for a dollar rally?/n
