U.S. futures fall with focus on key inflation data: Markets wrap

(Bloomberg) — U.S. stock futures fell as investors braced for the Federal Reserve's printing of a key inflation gauge that could help identify the path forward for interest rates. Bitcoin's rally passes $63,000.

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Contracts for the S&P 500 and the tech-heavy Nasdaq 100 both retreated about 0.3%. European stocks were volatile on another crowded day on the earnings calendar. Moncler SpA rallied after the Italian luxury company's profit beat expectations. Air France-KLM slumps after reporting fourth-quarter loss Anheuser-Busch InBev missed analysts' profit estimates and slipped.

Traders are looking ahead to key US personal consumption expenditure measurement data due later Thursday, which will highlight the bumpy road the central bank faces in meeting its 2% inflation target. The PCE reading is expected to validate recent commentary by central bank officials against a rush to ease monetary policy.

Russ Mold, investment director at AJ Bell, said warmer-than-expected inflation “could put the final nail in the coffin of the idea of ​​a focus for rate cuts before the summer.”

In Asia, the region's stocks rose following a rebound in Chinese stocks. The yen rose for more than a week against the dollar after Bank of Japan board member Hajime Takada signaled that the case for ending negative interest rate policy was gaining momentum.

Bitcoin extended gains after rising above $60,000 for the first time in more than two years on Wednesday, reflecting renewed demand from exchange-traded funds. The currency touched almost $64,000. 2021 is below the record high of $69,000.

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A measure of the dollar weakened, while Treasury yields were higher after a rally in bonds on Wednesday that saw the 10-year yield fall four basis points and the policy-sensitive two-year fall six basis points.

Stocks were strong in February as the S&P 500 and Nasdaq 100 rose more than 4% after record-breaking gains on technology-driven Wall Street. MSCI Inc. ’s global equity index rose for a fourth straight month, its longest winning streak since 2021.

For Ulrich Urban, Berenberg's head of multi-asset strategy and research, trading on the final day of February may be more affected by the month-end revision than the data, as inflationary trends have already priced into markets following this month's consumer spending. and producer price reports.

“The focus on PCE 'because the Fed cares' is valid,” Urban said. “But it's mostly already baked in the cake. As equities have outperformed bonds this year, markets will be more vulnerable to some rebalancing flows.

New York Fed President John Williams said Wednesday that the central bank “has a way to go” in its fight against inflation and Atlanta Fed President Raphael Bostic urged patience on policy changes.

Traders are now pricing in about 80 basis points by the end of the year — roughly in line with what officials indicated in December was a likely outcome. That would equate to three cuts in 2024 – as the central bank's moves have historically been in increments of 25 basis points. To put things in perspective, exchanges had forecast cuts of nearly 150 basis points this year in early February.

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Highlights of this week:

  • Germany CBI, Thursday

  • US consumer income, PCE deflator, initial jobless claims, Thursday

  • The Fed's Austin Goolsbee, Raphael Bostick and Loretta Meister speak Thursday

  • China's official PMI, the Caixin Manufacturing PMI, was released on Friday

  • Eurozone S&P Global Manufacturing PMI, CPI, Unemployment, Friday

  • BOE Chief Economist Huw Bill speaks on Friday

  • US Construction Spending, ISM Manufacturing, University of Michigan Consumer Sentiment, Friday

  • The Fed's Raphael Bostick and Mary Daly speak on Friday

Some key movements in the markets:

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  • The Stoxx Europe 600 was up 0.1% as of 9:21 a.m. London time.

  • S&P 500 futures fell 0.3%

  • Nasdaq 100 futures fell 0.3%

  • Futures for the Dow Jones industrial average fell 0.4%

  • The MSCI Asia Pacific index rose 0.4%

  • The MSCI emerging market index rose 0.2%

Coins

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro was up 0.1% at $1.0849

  • The Japanese yen rose 0.6% to 149.80 per dollar

  • The offshore yuan was little changed at 7.2087 per dollar

  • The British pound was little changed at $1.2663

Cryptocurrencies

  • Bitcoin rose 3.3% to $62,556.96

  • Ether rose 4.2% to $3,461.75

Bonds

  • The yield on 10-year Treasuries rose three basis points to 4.29%.

  • Germany's 10-year yield rose two basis points to 2.48%

  • Britain's 10-year yield rose two basis points to 4.20%

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This story was produced with the help of Bloomberg Automation.

–With assistance from Chiranjeevi Chakraborty and Richard Henderson.

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