Markets are leaning toward a risk-on tone, but without strong conviction. The recent aggressive move lower in US Treasury yields, particularly across the 2-year and 10-year, is providing near-term support for equities, even as the US dollar remains relatively firm. This divergence between falling yields and a resilient dollar is creating underlying tension beneath the surface.
Equity markets are attempting a short-term rebound, stabilising after recent volatility. However, uncertainty remains elevated ahead of key US data releases, keeping participation measured rather than decisive. Broader macro themes continue to cap confidence, including shifting Fed rate expectations, speculation around Warsh as a potential next Fed Chair, ongoing trade policy uncertainty, fiscal developments such as the so-called “big beautiful bill,” and persistent geopolitical tensions.
From a risk sentiment perspective, conditions are cautiously constructive. The pullback in US yields suggests markets see resilience in growth and moderating inflation pressures, helping US indices hold near-term support levels. That said, flows remain tactical. Investors appear willing to participate on dips but are reluctant to extend exposure aggressively without clearer macro confirmation. The prevailing tone is one of cautious risk-on while markets await the next dominant narrative.
Technically, US indices are testing resistance with early signs of a bounce, though they remain below major higher-timeframe resistance levels. The USD structure remains firm for now, but could shift quickly if yield momentum continues to fade. Gold remains pressured beneath the significant $5,000 resistance zone, while oil continues to struggle for sustained direction amid ongoing US-Iran and Russia-Ukraine geopolitical tensions.
Overall, markets are stabilising, but indecision persists. Flexibility remains key until stronger conviction returns.