US Futures Decline as Focus on Key Inflation Data: Markets Wrap

(Bloomberg) — U.S. stock futures fell as investors prepared to print the Federal Reserve's key inflation measure, which will help determine the future path of interest rates. Bitcoin's rally extended above $63,000.

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The S&P 500 and the tech-heavy Nasdaq 100 futures fell about 0.3%. European stocks rose on another busy day on the earnings calendar. Moncler SpA shares rose after the Italian luxury company's profits beat expectations. Air France-KLM fell after reporting a loss in the fourth quarter. Anheuser-Busch InBev shares fell after missing analysts' earnings estimates.

Traders are bracing for core US personal consumption spending gauge data due later on Thursday, which is likely to highlight the bumpy path the Federal Reserve faces in meeting its 2% inflation target. The PCE reading is expected to confirm recent comments from central bank officials showing no rush to ease monetary policy.

In Asia, the region's stock gauge rose after Chinese stocks rebounded. The yen rose the most in more than a week against the dollar after Bank of Japan board member Hajime Takata indicated that the case for ending negative interest rate policy is gaining momentum.

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

Treasury yields rose after Wednesday's bond rally that saw the 10-year yield fall by four basis points and the two-year yield fall by six basis points.

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

Traders are currently pricing in about 80 basis points of easing by the end of the year — roughly in line with what officials indicated in December as the most likely outcome. This equates to three cuts in 2024 – where the Fed's moves have historically been 25 basis point increases. To put things in perspective, swaps were anticipating roughly 150 basis points of cuts this year at the beginning of February.

The dollar gauge weakened, with the yen rising to a high of 149.61 against the dollar, as investors braced for a possible narrowing of the interest rate gap between Japan and the United States.

“We expect the Bank of Japan to take advantage of this deflationary environment to exit negative interest rates, but the policy stance will remain very accommodative through 2025,” Fitch Ratings director Jessica Hinds said in a note.

Main events this week:

  • German CPI, unemployment, Thursday

  • US consumer income, personal consumption expenditures deflator, initial jobless claims, Thursday

  • The Fed's Austan Goolsbee, Raphael Bostic and Loretta Mester speak on Thursday

  • China's official PMI, Caixin Manufacturing PMI, Friday

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

  • Bank of England chief economist Huw Bell speaks on Friday

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

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

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Some key movements in the markets:

Stores

  • The Stoxx Europe 600 Index was up 0.2% as of 8:21 a.m. London time

  • S&P 500 futures fell 0.3%

  • Nasdaq 100 futures fell 0.3%

  • Dow Jones Industrial Average futures fell 0.2%

  • MSCI Asia Pacific Stock Index rises 0.4%

  • MSCI Emerging Markets Index rises 0.1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2%.

  • There was little change in the euro at $1.0846

  • The Japanese yen rose 0.7 percent to 149.65 yen to the dollar

  • There was little change in the yuan in external transactions at 7.2084 to the dollar

  • There was little change in the pound sterling at $1.2666

Digital currencies

  • Bitcoin rose four percent to $62,973.92

  • Ethereum rose 5.1% to $3,491.46

Bonds

  • The yield on the 10-year Treasury note rose one basis point to 4.27%.

  • The yield on 10-year German bonds was little changed at 2.46%.

  • The yield on British 10-year bonds fell one basis point to 4.17%.

Goods

This story was produced with assistance from Bloomberg Automation.

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