S&P 500 Futures slip beneath 3,900 even as US Treasury yields drop

• S&P 500 Futures drops to eight-day low as risk-aversion spreads in Asia.
• Virus woes, reflation fears weigh on sentiment, US dollar benefits from Fed policymaker’s comments.
• S&P 500 Futures takes offers around 3,890, currently down 0.30% around 3,888, during early Monday. In doing so, the risk barometer flashes a three-day losing streak while revisiting the early March levels.

Risk-off mood gains extra strength as European Union (EU) weighs restricting the coronavirus (COVID-19) vaccine exports amid virus resurgence and doubts over AstraZeneca jabs. Also on the negative side could be the US-China and the Iran-Saudi Arabia tussle, not to forget the Washington-Tehran and American-North Korea tension.

It should be noted that Germany’s readiness to extend the virus-led lockdown to April and Reuters’ poll suggesting AstraZeneca’s despicable status in the bloc weigh on the mood too.

Elsewhere, President and CEO of the Federal Reserve Bank of Richmond Tom Barkin rejected the reflation fears from the yields and praised the US economic recovery. The same helped the US dollar index (DXY) to extend the latest run-up, currently rising 0.21% to 92.15.

On a distant phase, the Turkish President’s sacking of the central bank governor could also be cited as a catalyst for the downbeat sentiment.

It should, however, be noted that the People’s Bank of China’s (PBOC) optimism, coupled with Fed policymakers’ upbeat statements, challenges the mood.

Hence, traders will seek more clues of the bearish sentiment and the covid resurgence before calling the short. This may find a limitation from today’s light calendar.