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US stock index futures are rising, continuing the bullish trend from the previous day. The S&P 500 futures have climbed by 0.3%, while the tech-heavy NASDAQ has leaped by 0.5%. The industrial Dow Jones Index has posted a modest gain of 0.2%.
Traders seem convinced that the Fed is nearing the end of its historic policy-tightening campaign, boosting demand for riskier assets. Recent reports from major corporations have further fueled investors' enthusiasm.
Yesterday, the US Treasury announced plans to slow the growth of quarterly long-term securities sales, leading to a drop in the yield of the 10-year US Treasury bonds by two basis points, reaching 4.75%, a two-week low.
Following its latest meeting, the Fed has left the door open for another rate hike after pausing for the second consecutive time. However, officials hinted that the rise in the yield of long-term Treasury bonds could reduce the likelihood of further tightening.
The Bank of England is expected to maintain its highest interest rates since 2008 in the near term amid signs of a weakening British economy, labor market, and inflation. This bolsters optimism that central banks are approaching the end of their rate-hiking cycle, which is beneficial for the growth of risk assets.
Federal Reserve Chair Jerome Powell commented yesterday that financial conditions had "significantly tightened in recent months," partly due to higher yields on long-term bonds. Policymakers have repeatedly stated that the committee has been cautious; such language has often signaled a low probability of policy changes. The current statements indicate that the policy-tightening campaign is drawing to a close.
As for the commodity market, Brent crude has risen above $85 a barrel after a decline of about 5% over the previous three sessions.
Today, another set of data on the US labor market is anticipated, although it is unlikely to significantly impact market sentiment. It is expected that the number of initial unemployment claims will slightly decrease, while both the non-manufacturing sector's labor productivity and the cost of labor are projected to increase.
As for the S&P 500, the demand for the index remains high. Bulls need to defend $4,229 and take control of $4,268. This will help strengthen the bullish trend and also open up the possibility of a break to a new level of $4,304. Another priority for bulls will be to take control of $4,332, which will strengthen the bull market. If the index declines against the backdrop of diminishing risk appetite, bulls will have to protect $4,229. Breaking through this level, the trading instrument may return to $4,203 and drop to $4,175.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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