S&P 500 Futures, US Treasury bond yields portray market’s anxiety ahead of US inflation release
|- Global markets remain dicey ahead of the key US CPI for November.
- S&P 500 Futures struggle despite upbeat closing on Wall Street.
- US 10-year, 2-year Treasury bond yields snap three-day uptrend.
- Mixed precursors for US inflation readings, lighter macros also restrict trading momentum.
Typical pre-data inaction prevails during early Tuesday in the market as traders brace for the US Consumer Price Index (CPI) for November. Also likely to have restricted the trading moves could be the mixed signals for the US inflation data, as well as a light macro line and lack of major data in the Asian session.
While portraying the mood, the US 10-year and two-year Treasury bond yields print the first daily loss in four around 3.59% and 4.36% in that order while the S&P 500 Futures print mild losses near 4,022 despite strong Wall Street close on Monday. It should be noted that the oil price improved and the US Dollar Index (DXY) eased, but the traders remain cautious overall.
Traders witnessed downbeat prints of the United States Producer Price Index (PPI) on Friday, as well as firmer readings of the University of Michigan’s (UoM) Consumer Sentiment Index, inflation expectations from the UoM Survey and ISM Services PMI.
However, on Monday, the New York Federal Reserve’s (Fed) Survey of Consumer Inflation Expectations Survey stated that the 1-year ahead inflation expectations slumped to their lowest level since 2021 and marked the biggest month-to-month decline in November on record. The short-term inflation precursor from the NY Fed contrasts with the upbeat inflation expectations for the 5-year and 10-year reported by the St. Louis Federal Reserve (FRED) data. That said, the latest prints of the 5-year and 10-year inflation expectations portray a rebound to 2.28% and 2.35%, respectively.
On a different page, mixed headlines from China and Russia also challenged the market moves. Chinese Foreign Ministry spokesman Wang Wenbin conveyed dislike for the US sanctions on two of their diplomats on Monday. “These illegal sanctions severely affected Sino-American relations,” Wang said, per Reuters. Further, Russian President Vladimir Putin rejected supplying oil to the countries, respecting the Europe-led price cap.
Looking forward, US CPI for November is likely to ease to 7.3% YoY, versus the 7.7% prior figure, while the monthly CPI may retreat to 0.3% compared to 0.4% previous readings. It should be noted that the CPI ex Food & Energy appears to be the key and is expected to be unchanged at 0.3% MoM.
Also read: Forex Today: US inflation and central banks coming up next
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