US 10-year Treasury yields, S&P 500 Futures stay firmer amid mixed signals

• US 10-year Treasury yields extend the previous day’s recovery moves.
• S&P 500 Futures remain mildly bid around the record top.
• Mixed covid numbers, political jitters in Japan and chatters over bond purchase adjustments entertain traders.
• US ADP Employment Change, ISM Manufacturing PMI will be the key data.

Global markets remain slightly optimistic at the start of September even as virus concerns renew and the tapering chatters are on the hike, not to forget political woes in Tokyo. The reason could be linked to the market’s wait for the key US data, as well as hopes that the major central banks will avail more time before dialing back the easy money policies.

Although Australia’s second-most populous state registered record top covid infections, the nation could remain below the previous record of 1,380 as numbers from the largest population-containing state, New South Wales (NSW) eased. It’s worth noting that rumors over a jump in New Zealand’s covid figures are on the hike of late.

On Tuesday, Australia, New Zealand, China and the UK were among the key nations that reported easy daily virus numbers and favored risk-on mood.

Also challenging the market sentiment are the increasing chatters over the European Central Bank’s (ECB) bond purchase cut, due to strong inflation data from the bloc. That said, the preliminary reading of the Eurozone Consumer Price Index (CPI) for August jumped 3.0% YoY, the highest in over a decade.

It’s worth noting that the mixed data from the US rejects the urgency of the Fed’s tapering. The US Housing Price Index for June eased but the S&P/Case Shiller Home Price Index jumped to 19.1% YoY during the stated month. Further, the August month’s Conference Board measure of Consumer Confidence fell to 113.8 from 125.1 whereas the Chicago Purchasing Managers’ Index (PMI) for August dropped to 66.8 versus 68.0 expected and 73.4 prior.

In addition to the mixed data, comments from the Fed policymakers, latest by Cleveland Fed President Loretta Mester, copy Fed Chairman Jerome Powell’s cautious optimism and reject fears of a rate hike.

Elsewhere, Japanese Prime Minister Yoshihide Suga told reporters that he had no current plans to dissolve the country's lower house due to the severity of the coronavirus situation, per Reuters. However, the national leader showed readiness for a national election.

While mixed catalysts confuse traders but print mild optimism, the US ADP data and ISM Manufacturing PMI for August can provide the near-term market direction ahead of Friday’s jobs report.

Read: ISM Manufacturing PMI Preview: Why it could be the trigger for a big greenback comeback