U.S. stock futures flat, yields slide, after cooler CPI data
U.S. equity index futures little changed
Jun CPI MM, YY < estimates
Jun core CPI MM, YY < estimates
Initial jobless claims 222k vs 236k estimate
Euro STOXX 600 index up ~0.7%
Dollar falls; crude up; gold up >1%; bitcoin up ~3%
U.S. 10-Year Treasury yield tumbles to ~4.19%
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U.S. STOCK FUTURES FLAT, YIELDS SLIDE, AFTER COOLER CPI DATA
The main U.S. equity index futures are little changed, though yields are sliding, after the release of the latest data on U.S. consumer prices and jobless claims. E-mini S&P 500 futures EScv1 are around flat vs down around 0.1% just before the numbers came out.
The June headline CPI readings on a month-over-month and year-over-year basis were both cooler than expected. In fact, the month-over-month reading was negative for the first time since December 2022. The month-over-month and year-over-year core prints were also both below the Reuters Poll numbers.
Initial jobless claims were 222k vs a 236k estimate. Continuing claims came in at 1.852M vs a 1.86M estimate:
According to the CME's FedWatch Tool, the probability that the FOMC leaves rates unchanged at its July 30-31 policy meeting has not changed much. It stands now stands at 91% from 95% just before the data came out. There is now around a 9% chance the Fed actually cuts by 25 basis points vs about 5% just before the numbers were released.
Looking further out into 2024, the FedWatch Tool is showing an increased bias for rates to tick down 25 basis points in September. Additionally, there is now a slight bias for a second cut to occur in November vs December prior to the numbers.
The U.S. 10-Year Treasury yield US10YT=RR is now around 4.20% vs 4.28% just before the data was released. The yield ended at 4.28% on Wednesday.
Nearly all S&P 500 sector SPDR ETFs are higher ahead of the open. Real estate XLRE.P, up more than 1.5%, is posting the biggest rise.
The KBW regional banking ETF KRE.P is up more than 2%.
Regarding the data, Lou Basenese, president and chief market strategist at MDB Capital in New York, said:
"The data finally is fitting into investors' narrative that the Fed is going to cut rates. We had those 2-3 months of hot prints, and now we're seeing a decrease. I think this is the first step in the green light."
Basenese added "The next question that comes after this is, is this decrease sustainable? I think we get a glimpse and an answer to that tomorrow with the PPI report. If we see that the PPI is also decelerating, then I think now they've got a green light to cut before the election."
Here is a premarket snapshot shortly before 0900 ET (1300 GMT):
(Terence Gabriel, Chibuike Oguh)
*****
FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
M&A: SHAKING OFF THE POST-PANDEMIC DOLDRUMS - CLICK HERE
FRENCH ELECTION STILL PRESENTS OPPORTUNITIES - CLICK HERE
NVIDIA CROWDING IS FALLING SHARPLY - UBS - CLICK HERE
EUROPE EDGES HIGHER BEFORE US CPI TEST - CLICK HERE
STOCK FUTURES HINT AT FURTHER RECOVERY BEFORE U.S. CPI - CLICK HERE
COUNTDOWN TO CPI - CLICK HERE
LMData07112024 https://tmsnrt.rs/3zLylNH
Premarket07112024 https://tmsnrt.rs/3S52JZP
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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