The United States is scheduled to reveal its yearly updates to the consumer price index at 8:30 a.m. New York time. Last year, the update was substantial enough to throw doubt on overall inflation progress, and traders were once again betting that the recalculations will influence views on when the Federal Reserve may lower interest rates.
“This could have important implications for the Fed,” Rabobank analysts stated in a research note. “It could increase or decrease the confidence that the FOMC has in a sustainable return to 2% inflation.”
US stock-index futures and Europe’s Stoxx 600 rose. Ten-year Treasuries fell modestly, increasing their yield by more than 15 basis points in the last five days. The following significant data point will be the regular US.
PepsiCo Inc.’s shares fell in premarket trade on a dismal sales estimate. L’Oreal fell 7% after Chinese consumers reduced their trip expenditure, while Tesco Plc rose after Barclays Plc announced that it would purchase majority of the retail chain’s banking operations.
Bond traders have spent the week navigating a spate of well-received US paper sales with cautious rhetoric on rate reduction from central bank policymakers. Fed Chair Jerome Powell’s stance on a March rate cut has left the bond market in doubt, promoting derivative trades that gamble on a drop in bond market volatility.
On Thursday, the S&P 500 briefly rose above 5,000 for the first time before ending little altered. Since late October, US equities have only had one weekly decrease, and the gauge has more than quadrupled from its epidemic low in March 2020, fueled by hopes of a mild economic landing and confidence about the influence of artificial intelligence.
“The equity market is responding to the positive data story and quite incredibly continues to march on,” said Charles Diebel of Mediolanum International. “If growth continues and there is a gentle or no landing, that is positive for stocks. And if anything catastrophic happens, the Fed will decrease interest rates.”
According to Michael Hartnett of Bank of America Corp., the rise is approaching the point where it will trigger sell signals. The bank’s proprietary bull-and-bear indicator is approaching a level that might be viewed as a contrarian tip to sell, he stated.
Listen to the Big Take podcast on iHeartRadio, Apple Podcasts, and Spotify. Read the transcript here.
In Asia, mainland China, Taiwan, South Korea, Indonesia, the Philippines, and Vietnam all closed their markets for the Lunar New Year.
The Japanese yen stabilised after falling 0.8% versus the dollar on Thursday, after remarks from a Bank of Japan deputy governor that the central bank will not rush to change its loose policy settings.