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U.S. equity futures traded mixed Thursday as investors looked to snap a three-day losing streak on Wall Street amid further signals of Fed rate cuts and another batch of key employment data.
Stocks ended lower yesterday while Treasury yields and the dollar nudged higher as markets largely ignored minutes from the Federal Reserve’s December policy meeting, which confirmed the central bank’s intention to begin lowering borrowing costs later in the year.
The timing of rate cuts remains up for debate, and markets are still expecting double the reductions that Fed officials have telegraphed, but the minutes nonetheless cemented the case that rates have peaked and price pressures are easing.
Related: Fed minutes suggest interest rates have peaked, but timing of cuts still debated
“While acknowledging inflation pressures have diminished, (the Fed) still has to move more carefully to ensure orchestrate the soft landing that everyone has bought into,” said Charlie Ripley, senior investment strategist for Allianz Investment Management in Minneapolis. A soft landing means easing inflation and no recession.
The Atlanta Fed’s GDPNow forecasting tool, in fact, suggests the economy is growing at a 2.5% clip, putting recession risk well into the back half of the year if it were to materialize.
The biggest risk in terms of near-term recession is likely to come from the job market, where labor demand is easing and the wage premium that employees get from changing roles has fallen to the lowest levels in three year.
ADP will publish its national employment report at 8:15 am U.S. Eastern Time, with weekly jobless-claims data following 15 minutes later. The Labor Department’s December nonfarm-payrolls report is due Friday at 8:30 am Eastern time.
Treasury yields are steady heading into the jobs-data releases, with benchmark 10-year notes changing hands a 3.954%, near the highest in two weeks, while 2-year notes were pegged at 4.343%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.16% lower in the overnight session at 102.326.
On Wall Street, futures contracts tied to the S&P 500 are indicating a 3 point gain while those linked to the Dow Jones Industrial Average are suggesting a 70 point advance. The tech-focused Nasdaq is called 10 points lower
In Europe, inflation readings from France, as well as a series of large German states, for the month of December came in slightly ahead of forecasts. A private reading of economic activity around the region indicated a seventh consecutive month of contraction for the world’s biggest economic bloc.
The regionwide Stoxx 600 was marked 0.34% higher in early Frankfurt trading, while Britain’s FTSE 100 gained 0.06% in London.
Overnight in Asia, the MSCI ex-Japan benchmark was little changed heading into the close of trading, while Japan’s Nikkei 225 slipped 0.53% in Tokyo.
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