US T-bond yields cling to 1.48%, S&P 500 Futures retreat from record high amid sluggish markets

• US Treasury yields refrain from extending the previous day’s pullback from fortnight high.
• S&P 500 Futures seek fresh clues around all-time highs.
• News concerning US retail sales, stimulus and Omicron favored bulls earlier.
• Lack of major catalyst tests the market optimism amid holiday mood, US data eyed.

Market sentiment dwindles during early Tuesday, following an upbeat start to the week. The reason could be linked to traders’ rethink over the previously positive risk catalysts amid an absence of major data/events and holiday mood.

That said, the US 10-year Treasury yields seesaw around 1.48% after the 1.7 basis points (bps) of a decline the previous day whereas the S&P 500 Futures print mild losses around 4,775 after the Wall Street benchmark refreshed the record on Monday. It should be noted that the US 2-year Treasury yields printed the higest of 0.758% for the day, the highest since March 2020.

Strong holiday season US retail sales and studies showing fewer odds of hospitalization due to the Omicron covid variant offered a positive week-start to the traders after the Christmas holidays. On the same line were comments from US Vice President Kamala Harris who signaled to use her tie-breaking vote to pass President Joe Biden’s Build Back Better (BBB) stimulus plan. Furthermore, headlines from the People’s Bank of China (PBOC) and the Chinese Finance Ministry, suggesting further easy money to help sustain the growth of the world’s second-largest economy, also favored the risk appetite.

It’s worth noting that the US Centers for Disease Control and Prevention (CDC) followed the UK while reducing the isolation and quarantine period for the general population from the previous 10 to five.

On a different page, ongoing talks over Iran’s denuclearization and a global push for peace between Russia and Ukraine also seem to have offered relief to the markets.

Above all, markets remain dicey amid an absence of major data/events considering the year-end inaction and positioning. It should, however, be kept in mind that the Fed’s rate hike concerns may keep the US Treasury yields firmer, which in turn could help the US Dollar Index (DXY), up 0.05% intraday around 96.12 at the latest.

That said, the US S&P/Case-Shiller Home Price Indices and House Price Index for October will precede the Richmond Fed Manufacturing Index for December to entertain intraday traders. However, major attention will be given to the Omicron headlines and risk catalysts mentioned above.