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U.S. equity futures were mixed in early Monday trading, with Treasury yields holding steady, as investors entered the final week of a challenging second quarter focused on a key inflation reading and a resilient domestic economy.
The S&P 500 has carved out a second quarter gain of around 4%, but is up more than 10% from its mid-April low largely on the back of outsized gains for megacap tech stocks such as Nvidia (NVDA) and Apple (AAPL) and renewed bets on a Federal Reserve rate cut tied to easing inflation pressures.
Investors will navigate tests of both of those drivers this week with May quarter earnings from Micron Technology (MU) , a key players in the AI memory market, due Wednesday and the release of the Fed’s preferred inflation gauge, the PCE Price index, on Friday.
Both the headline and core PCE inflation rates are forecast to ease to around 2.6% in May, which would be the slowest annualized rates since March of 2021 and likely cement the market’s betting on an autumn Fed rate cut.
At present, the CME Group’s FedWatch suggests a 66% chance of a quarter point reduction in September, with similar odds for a follow-on move before the end of the year.
Investors will likely focus on a key inflation reading this week as bets on an autumn Fed rate hike hold steady despite stronger-than-expected economic data.
In the bond market, benchmark Treasury bond yields, which nudged higher last week following PMI data from S&P Global showing June business activity jumped to the fastest pace in more than two years, were steady ahead of a week of $183 billion in coupon auctions over the next five days.
Benchmark 10-year Treasury yields were last seen trading at 4.255%, with 2-year notes pegged at 4.734% ahead of tomorrow’s $69 billion auction.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.22% lower at 105.566.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500, which has risen eight of the past nine weeks, were priced for a modest 6 point gain.
Futures contracts tied to the Dow Jones Industrial Average, meanwhile, suggest a 92 point advance while those linked to the tech-focused Nasdaq suggest a modest 12 point decline.
Stocks on the move include Boeing (BA) , which fell 0.63% in premarket trading amid reports that U.S. prosecutors are recommending that the Justice Department bring criminal charges against the planemaker tied to fatal crashes in 2018 and 2019.
In overseas markets, Europe’s Stoxx 600 edged 0.39% higher in Frankfurt with investors focused on Parliamentary elections in France later in the week, while Britain’s FTSE 100 edged 0.39% higher in early London trading.
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Overnight in Asia, currency traders were on intervention watch as the yen slipped closer to the 160 market against the U.S. dollar, a weakening that could trigger massive amounts of yen buying from the Bank of Japan.
The Nikkei 225 ended 0.54% higher in Tokyo, with export stocks leading the advance, while the regional MSCI ex-Japan benchmark slipped 0.49% into the close of trading.
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