S&P 500 futures are gaining ground in premarket trading as traders managed to shrug off worries about the Delta variant of coronavirus.
At this point, there are no signs that the new wave of coronavirus puts material pressure on the economy. Today, EU reported that Euro Area Manufacturing PMI declined from 63.4 in June to 62.6 in July while Euro Area Services PMI increased from 58.3 to 60.4. Both reports exceeded analyst estimates.
Traders will soon have a chance to take a look at PMI reports from U.S. which are expected to show that Manufacturing PMI declined from 62.1 in June to 62 in July while Services PMI increased from 64.6 to 64.8. It should be noted that both Manufacturing PMI and Services PMI remain close to multi-year highs which indicates that economy’s rebound is very strong.
WTI Oil Tries To Settle Above The $72 Level
WTI oil continues its rebound as traders bet that demand for oil will continue to increase despite the threat posed by the new wave of the virus.
Interestingly, energy-related stocks are trading well below highs that were seen back at the beginning of June, while oil is already trading at higher levels.
If WTI oil continues to rebound, traders’ money may flow into the energy segment which looks rather cheap compared to many alternatives.
Treasury Yields Move Higher As Traders Get Out Of Safe-Haven Assets
The yield of 10-year Treasuries is currently trying to settle above 1.30% as demand for safe-haven assets declines. Several trading sessions ago, the yield of 10-year Treasuries made an attempt to settle below 1.13%.
Higher yields indicate that bond traders have calmed down after the recent panic buying which was caused by virus worries. In an ordinary situation, higher yields may have put some pressure on tech stocks. However, the current increase in yields indicates that demand for safe-haven assets decreases, which is bullish for riskier assets like stocks.