S&P 500 Futures drop half a percent, US T-bond yields tread water amid anxiety over Russia-Ukraine war

• Market sentiment turns cautious as Russia’s next move eyed.
• S&P 500 Futures fades bounce off nine-month low, US 10-year Treasury yields hover around 1.97-98%.
• US data came in positive, Fedspeak was mostly upbeat but nothing mattered more than Russia-Ukraine war.

Having witnessed a volatile day on Thursday, global markets portray traders’ anxiety amid a light calendar and lack of clarity over the Russia-Ukraine issue.

While portraying the market’s indecision, the S&P 500 Futures drop 0.65% intraday to 4,256 whereas the US 10-year Treasury yields seesaw around 1.97-98% by the press time.

That said, the US equities initially tanked on the early Thursday and the US Treasury yields rallied on news that Russia invaded Ukraine and reached past border regions towards the capital. Moscow’s aggressive move pushed Western leaders towards harsh sanctions and readiness to help Kyiv with military power.

However, comments from Russia, like “Moscow is willing to negotiate the terms of Ukraine's surrender,” seemed to have triggered the late Thursday’s rebound in market sentiment. Additionally, chatters that Ukraine President Zelenskyy said they need to discuss ceasefire with Russia also favored risk sentiment previously.

Though, CNN’s news citing the Russian military’s readiness to bombard Kyiv, as well as comments from Ukrainian Envoy to Japan who conveyed that the Ukrainian government lost control over Chernobyl nuclear plant, are likely catalysts that recently weigh on the market’s mood.

Elsewhere, the second reading of the US Q4 GDP matched 7.0% annualized forecasts but firmer figures of Personal Consumption Expenditure, Chicago Fed National Activity Index and Jobless Claims seemed to have added to the US dollar’s strength.

Also, comments from Atlanta Fed President and FOMC member Raphael Bostic and Richmond Fed President, as well as an FOMC member, Thomas Barkin, seemed to have additionally favored the USD bulls. However, Cleveland Fed President Loretta Mester said that she doesn't think raising interest rates by 50 bps in March is compelling. On the contrary, Federal Reserve (Fed) Governor Christopher Waller said on Friday, he still believes a 50-basis points (bps) March rate hike is a possibility if the economic data comes in stronger.

Looking forward, geopolitical updates from Russia-Ukraine are the key catalyst for the market. Also important will be the Fed’s key inflation gauge, namely Core PCE Price Index, as well as Durable Goods Orders, for January.