April 13, 2024

US Futures and Bonds Slip With Focus on Inflation: Markets Wrap

(Bloomberg) — US stock futures edged lower and bonds fell as investors braced for a print of the Federal Reserve’s key inflation metric, which will help identify the path forward for interest rates.

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Contracts for the S&P 500 and the tech-heavy Nasdaq 100 both retreated by about 0.2%. Snowflake Inc. plunged in premarket after the cloud software company said its chief executive officer is stepping down and gave a disappointing sales forecast. WW International Inc. plunged after Oprah Winfrey said she was going to leave its board.

European stocks fluctuated during another crowded day on the earnings calendar. Moncler SpA rallied after the Italian luxury company beat profit expectations. Air France-KLM slumped after a fourth-quarter loss.

Thursday’s US core personal consumption expenditure gauge will likely validate recent commentary from Fed officials showing no rush to ease monetary policy and underscore the twists and turns on the route to the central bank’s 2% inflation target. A higher-than-anticipated reading could undermine expectations for three quarter-point rate cuts by year-end.

“The market always needs to focus on something, and with earnings out of the way and the rates outlook priced in, inflation is the next catalyst,” said Beata Manthey, equity strategist at Citigroup Inc. “It’ll depend on how bad or good the print is today, but when we look at the fundamentals, earnings have shown they’re delivering.”

Treasury yields rose, with the more policy sensitive two-year note up five basis points. Yields in Europe also climbed after mixed readings on price pressures from France and Spain, with German inflation due later. The dollar steadied, while the yen gained the most in more than a week after Bank of Japan Board Member Hajime Takata signaled that the case for ending the BOJ’s negative rate policy is gaining momentum.

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

Stocks are rounding off a strong February, with the S&P 500 and the Nasdaq 100 up more than 4% after excitement around artificial intelligence drove a tech-powered, record-breaking run on Wall Street. MSCI Inc.’s global equity index is rising for a fourth month, its longest winning streak since 2021.

For Ulrich Urbahn, head of multi-asset strategy and research at Berenberg, trading on the final day of February is likely to be influenced more by month-end rebalancing than by data, as inflation trends have already been priced into markets following this month’s consumer and producer price reports.

“The focus on PCE ‘because that’s what the Fed cares about’ is valid,” Urbahn said. “But it’s mostly already baked in the cake. Markets will be more affected by some rebalancing flows as equities have hugely outperformed bonds this year.”

New York Fed President John Williams said Wednesday the central bank has “a ways to go,” in its battle against inflation and Atlanta Fed chief Raphael Bostic urged patience in regard to policy tweaks.

Traders are currently pricing around 80 basis points of easing by year-end — almost in line with what officials in December indicated as the likeliest outcome. That would equate to three cuts in 2024 — as the Fed moves have historically been increments of 25 basis points. To put things in perspective, swaps were projecting almost 150 basis points of cuts this year at the start of February.

“Fedspeak and economic data so far this week suggest that central bankers remain data-dependent, which raises volatility around key economic data releases, and that inflation seems to be re-accelerating in the short term, which may make it harder to reach the 2% inflation goal,” Kathleen Brooks, research director at XTB, wrote in a note.

Key Events This Week:

  • Germany CPI, Thursday

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

  • Fed’s Austan Goolsbee, Raphael Bostic and Loretta Mester speak, Thursday

  • China official PMI, Caixin manufacturing PMI, Friday

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

  • BOE chief economist Huw Pill speaks, Friday

  • US construction spending, ISM Manufacturing, University of Michigan consumer sentiment, Friday

  • Fed’s Raphael Bostic and Mary Daly speak, Friday

Some of the main moves in markets:


  • S&P 500 futures fell 0.3% as of 6:22 a.m. New York time

  • Nasdaq 100 futures fell 0.2%

  • Futures on the Dow Jones Industrial Average fell 0.3%

  • The Stoxx Europe 600 rose 0.1%

  • The MSCI World index was little changed


  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0843

  • The British pound was little changed at $1.2663

  • The Japanese yen rose 0.4% to 150.03 per dollar


  • Bitcoin rose 3.9% to $62,930.26

  • Ether rose 4.9% to $3,486.52


  • The yield on 10-year Treasuries advanced four basis points to 4.31%

  • Germany’s 10-year yield advanced four basis points to 2.50%

  • Britain’s 10-year yield advanced seven basis points to 4.25%


  • West Texas Intermediate crude fell 0.2% to $78.39 a barrel

  • Spot gold fell 0.2% to $2,031.03 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Chiranjivi Chakraborty.

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©2024 Bloomberg L.P.

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