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U.S. equity futures bumped higher in early Tuesday trading, with modest moves higher for both Treasury yields and the dollar, as investors continued to focus on a key inflation reading later in the week to extend the market’s end-of-year rally.
Stocks ended lower on Monday, with mega cap tech names leading declines for the S&P 500 and the Nasdaq, amid a cautious session that was clouded by geopolitical risks and muted early trading volumes.
Investors are likely to get risk appetites in check over the coming session, with Wednesday’s November CPI in focus as the last major inflation reading prior to the Federal Reserve’s final policy meeting of the year next week in Washington.
Economists see core inflation holding at 3.3% in the November report, with headline prices rising modestly higher, to 2.7%, when the report is published at 8:30 am Eastern time on Wednesday.
Traders see an 86.1% chance that the Fed will lower is benchmark Fed Funds rate by a quarter of a percent, to between 4.25% and 4.5%, but have pared bets on follow-on cuts into next year as price pressures remain stubbornly high and new policies from the incoming Trump administration as likely to exacerbate them.
Benchmark 2-year Treasury note yields were marked 3 basis points higher in overnight trading at 4.133% ahead of a $58 billion auction in new 3-year paper later today, while 10-year notes were trading 3 basis points higher at 4.219%.
Bond markets are likely to be in focus today with the first of three major coupon auctions that will raise around $120 billion for the U.S. Treasury
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.11% higher at 106.322.
On Wall Street, stocks are looking at another flat open with futures contracts tied to the S&P 500 suggesting a modest 3 point opening bell gain, while those linked to the Dow Jones Industrial Average priced for a 5 point pullback.
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Futures tied to the tech-focused Nasdaq suggest a 20 point decline with Palantir Technologies (PLTR) , Nvidia (NVDA) and Tesla (TSLA) three of the more active names in premarket.
Oracle (ORCL) shares were another notable mover, falling 8.4% following a disappointing set of third quarter earnings after the bell last night.
Boeing (BA) shares were marked 0.5% higher following reports that the planemaker restarted of 737 Max production following last month’s strike by around 33,000 factory workers that shut it down for around seven weeks.
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In overseas markets, the regional Stoxx 600 benchmark looks set to snap an eight-day winning streak and was marked 0.23% lower in mid-day Frankfurt trading, with Britain’s FTSE 100 down 0.6% in London.
Overnight in Asia, the regional MSCI ex-Japan benchmark slipped 0.34% into the close of trading, with Japan’s Nikkei 225 rising 0.53% in Tokyo.
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