S&P 500 futures pull back from 14-month highs, yields pare recent losses on weak Friday

• Market sentiment remains uncertain as traders reassess past risk appetite and central bank bias ahead of the BoJ.
• S&P 500 futures are down slightly and are at the highest levels since April 2022, hit the day before.
• US Treasury yields lick their wounds after a daily underperformance.
• Wait for Fed member speeches and US data for clear indications, but risk appetite is likely to moderate.

Traders take a break early Friday, tempering optimism after a volatile Thursday, amid a light calendar and awaiting the key Bank of Japan (BoJ) monetary policy meeting as well as US data medium level It should be noted that the easing of aggressive bets on the Fed and mixed US data joined with downbeat yields to boost market sentiment the day before.

While portraying the mood, S&P 500 futures are posting slight losses from the highest levels since April 2022, down 0.23% intraday to 4,460 points. That said, 10-year US Treasury yields break a two-day downtrend near 3.74%.

Both the S&P 500 and Nasdaq futures reached their highest levels in 14 months yesterday, while the Dow Jones led the gains streak with an intraday advance of 1.26%, to settle at around 34,408 points at Thursday’s close. .

If we look at the catalysts, the general fall in the dollar amid mixed data and doubts about the July rate hike grabbed the attention. Earlier, headlines from China and Europe may have also supported risk appetite.

That being said, the US Dollar Index (DXY) posted the biggest drop in three months, while marking the lowest levels since May 12, at 102.15.

Turning to US data, US retail sales growth marked an increase of 0.3% in May, versus -0.1% expected and 0.4% previously, while core data, i.e. excluding autos , coincided with the market forecasts of 0.1% for that month, compared to the previous 0.4%. Elsewhere, the New York Fed’s Empire State Index for Manufacturing stood at 6.6 in June, versus -15.1 expected and -31.8 previously, while the Philadelphia Fed’s Index for Manufacturing fell. up to -13.7 in said month, compared to -10.4 previously, and compared to -14 expected by the markets. Additionally, May US industrial production cooled to -0.2%, from 0.1% estimate and 0.5% prior, while weekly jobless claims repeat the upwardly revised 262,000 for the week ending 9 June, compared to the 249,000 expected.

On the other hand, the aggressive attitude of the European Central Bank (ECB), with a rise in interest rates of 25 basis points (bp) and signs of new increases, joined the rate cut of the People’s Bank of China (PBoC). ) to also favor market optimism.

It is worth noting that the 67% reading from CME’s FedWatch tool for the July rate hike joins previously bleak China data and a market reassessment of the Fed’s hawkish stance, which lately it has boosted the optimists.

Next, the announcements of the Bank of Japan (BoJ) monetary policy meeting will be key to knowing the immediate directions. Later in the day, final readings of Eurozone inflation data for May will precede preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June with its five-year inflation expectations component.