• US 10-year Treasury yields stay firmer at the highest since mid-May during four-day uptrend.
• S&P 500 Futures snap five-day run-up, refreshes intraday low of late.
• Fed tapering concerns join China-linked fears to probe sentiment amid quiet Asian session.

After an upbeat start to the week, market sentiment dwindles during early Wednesday amid mixed clues from the US and China. While portraying the mood, the US 10-year Treasury yields rise 3.8 basis points (bps) to 1.672%, a fresh high since late May, whereas S&P 500 Future drop two points, or 0.04% intraday, to 4,509 by the press time.

It’s worth noting that the gap between the 3-year and the 10-year Treasury yields also widens the most since June, suggesting the market’s optimism towards the Fed rate hike.

Fed tapering woes propel the US Treasury yields, weighing on the equities, during the recent days. Fed Governor Christopher Waller was the latest to support rate hike as saying, per Reuters, “If inflation keeps rising at its current pace in coming months rather than subsiding as expected, Federal Reserve policymakers may need to adopt ‘a more aggressive policy response’ next year.” Additionally, Reuters’ latest poll of economists cites the risk of an earlier rate hike by spotting the reflation fears.

Elsewhere, comments from Helge Berger, the IMF's China Mission Chief and Assistant Director in the IMF's Asia and Pacific Department, highlights risks emanating from the world’s second-largest economy. The diplomat signaled that the Evergrande risk to China is contained for now but the nation is accumulating downside risks. That being said, the People’s Bank of China (PBOC) keeps benchmark interest rates unchanged for the eighteenth time in a row during the latest Interest Rate Decision.

On Tuesday, global market sentiment improved after the downbeat US housing number questioned the Fed’s tapering plans. US Housing Starts registered a sharp fall in September, -1.6% MoM versus +1.2% prior, whereas the Building Permits registered the largest contraction since February, down 7.7% compared to 5.6% previous readouts.

To portray the previous risk-on mood, the Wall Street benchmarks flirt with the record tops whereas the US Dollar Index (DXY) dropped to a three-week low, down 0.07% intraday around 93.70 by the press time.

Looking forward, inflation concerns and China headlines may help the markets to find short-term direction ahead of Friday’s preliminary readings of September PMIs.

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