US Futures Edge Lower Before Key Inflation Data: Markets Wrap

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US futures pointed to a slightly weaker start for Wall Street, following two weeks of robust gains, as investors waited for inflation data that could show if the Federal Reserve is done hiking interest rates.

Contracts for the S&P 500 and the Nasdaq 100 slipped about 0.3%, after the underlying indexes closed sharply higher on Friday. Boeing Co. shares advanced almost 4%, lifted by a $52 billion deal with Emirates, as well as news that China is weighing an end to a freeze on purchases of Boeing aircraft.

Europe’s Stoxx 600 index climbed 0.7%, boosted by a rally in healthcare stocks. Denmark’s Novo Nordisk A/S jumped more than 4% after a study backed the use of Wegovy, its blockbuster weight-loss drug, to cut heart attacks and deaths in obesity patients.

Market attention is firmly focused on Tuesday’s US consumer price data, which are expected to show inflation easing to a year-on-year rate of 3.3% in October, down from 3.7% in the prior month. Ten-year Treasury yields slipped two basis points to 4.63%, leaving them down about 30 basis points this month.

While money markets are sticking with bets for the Fed to start cutting rates from next year, economists differ on how soon and fast the policy easing might come. Morgan Stanley forecast deep interest-rate cuts over the next two years, starting from next June, while Goldman Sachs predicted the first cut around end-2024.

“We had a really pivotal week last week, all sending a similar message, which is I think, the Fed is done,” Eric Robertsen, global head of research at Standard Chartered Bank said on Bloomberg Television. “The event risk around long-term interest rates heading higher from here has been significantly reduced.”

Meantime, more signs of thawing US-China ties are emerging, with Joe Biden and Xi Jinping due to meet on Wednesday. The White House has cited a resumption of US-China military communications as a priority.

“All of these things are starting to line up, showing that the two sides do have intent to make this look like a better outcome,” Helen Zhu, chief investment officer at Nan Fung Trinity HK Ltd., said in an interview with Bloomberg TV.

In currency markets, the yen fell to a fresh 2023 low against the dollar, raising concerns that authorities will intervene to support the currency.

The pound strengthened for a second day and 10-year gilt yields also slipped, with Wednesday’s UK inflation numbers forecast to show slowing price growth. Markets showed no reaction to the firing of Home Secretary Suella Braverman by Prime Minister Rishi Sunak.

Brent crude oil futures held near $81 after losing about 12% in the past three weeks. OPEC will publish its monthly market report on Monday followed by the International Energy Agency later in the week.

Bitcoin hovered near $37,000 — around the highest price in 18 months.

Events coming up this week:

  • ECB Vice President Luis de Guindos speaks, Monday
  • US CPI, Tuesday
  • UK jobless claims, Tuesday
  • Chicago Fed President Austan Goolsbee speaks, Tuesday
  • China retail sales, Wednesday
  • UK CPI, Wednesday
  • US retail sales, PPI, Wednesday
  • China new home prices, Thursday
  • US initial jobless claims, Thursday
  • New York Fed President John Williams, Thursday
  • US housing starts, Friday
  • ECB President Christine Lagarde speaks, Friday
  • Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins, San Francisco Fed President Mary Daly all speak, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.7% as of 10:44 a.m. London time
  • S&P 500 futures fell 0.2%
  • Nasdaq 100 futures fell 0.2%
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index rose 0.3%
  • The MSCI Emerging Markets Index rose 0.5%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0691
  • The Japanese yen fell 0.1% to 151.74 per dollar
  • The offshore yuan was little changed at 7.2997 per dollar
  • The British pound rose 0.1% to $1.2245

Cryptocurrencies

  • Bitcoin fell 0.5% to $36,980.11
  • Ether fell 0.3% to $2,054.84

Bonds

  • The yield on 10-year Treasuries declined two basis points to 4.63%
  • Germany’s 10-year yield was little changed at 2.71%
  • Britain’s 10-year yield declined two basis points to 4.31%

Commodities

  • Brent crude rose 0.2% to $81.57 a barrel
  • Spot gold fell 0.1% to $1,937.54 an ounce

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