Market news

23 June 2022

Stock futures, yields remain depressed as recession fears mount ahead of PMIs

  • Global markets remain dicey as traders await more clues to confirm economic slowdown.
  • US 10-year Treasury yields remain inactive, stock futures in the US, Europe print mild losses.
  • Fed’s Powell failed to impress greenback bulls, chatters surrounding BOJ dominate bond markets.
  • Preliminary readings of June’s PMIs, second round of Powell’s Testimony will be important for fresh directions.

Fears of economic setback keep traders on their toes during early Thursday morning in Europe. The market’s pessimism, however, lacked major data/events during the Asian session and hence magnified the inaction. Additionally restricting the moves could be the cautious sentiment ahead of the first readings of the monthly PMIs from the Eurozone, the UK and the US.

With this, the US 10-year Treasury yields dropped the most in one week the previous day before portraying inaction at around 3.15% by the press time. Further, the S&P 500 Futures drop 0.20% to 3755 whereas the Eurostoxx 50 Futures print a 0.40% intraday fall at the latest.

Be it recently downbeat data from the major economies or the fears of a further supply crunch, global traders fear that the economic slowdown is a next-door enemy. Adding to the market fears are confirmation of the further aggression of central bankers, recently confirmed by the US Federal Reserve (Fed) Chairman Jerome Powell.

Fed’s Powell considered the present monetary policy bias appropriate to battle the inflation woes. It’s worth noting, however, that the Fed Boss’s readiness to use the aggressive measures, irrespective of their consequences, seemed to have put a floor under the greenback. On the same line is the latest news from Reuters signaling an upbeat print of June’s jobs report.

Policymakers from the European Central Bank (ECB), Swiss National Bank (SNB), Bank of Canada (BOC) and the Bank of England (BOE) were also suggesting further rate hikes during the latest appearance.

An exception amid the aggressive central banks, namely the Bank of Japan (BOJ), fails to gain the market’s sympathy as the bond market suggests the foreign funds’ exit from Japanese Treasuries, which in turn pushes the last stone to turn.

Elsewhere, fears of German economic contraction due to the maintenance-linked halt of Russian gas supplies join pessimism surrounding China’s economy and the Sino-American trade prospects to weigh on the market sentiment.

However, traders await the preliminary readings of June’s activity numbers from the key economies to confirm the bearish bias. Also important to watch will be the UK’s by-elections and the second round of Fed Chair Powell’s testimony, not to forget the weekly prints of the US jobless claims.

Also read: Recession fears dominate

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