US futures lower amid profit taking ahead of US CPI release

• European markets head lower.

• UK unemployment and wages rise, pushing GBP higher.

• US futures lower amid profit taking ahead of US CPI release.

European equity bulls have been put back in their place this morning, with markets fading yesterday’s gains across the board. This morning was all about the UK economy, with jobs data bringing a concerning jump in unemployment which hit 4.3% for the three months to September. However, with the ONS warning against drawing too many conclusions owing to issues in their data gathering, the rise we have seen in UK wage growth (4.3%) has helped drive the pound higher as inflationary pressures remain. After-all, those unemployment rate concerns can be offset by the lower claimant count in both September and August.

US futures are in the red today as traders return from their Veterans Day celebration to question the momentum behind this post-election rally. With the S&P 500 having topped 6000, we are seeing some profit taking ahead of tomorrow’s critical inflation report. The perception that Donald Trump will spark a fresh wave of inflation through a combination of tariffs and increased spending has pushed treasury yields higher, and we are seeing them push higher once again after a recent pullback. While tomorrows CPI inflation gauge looks likely to push higher, traders should be careful to draw any conclusions given the fact that this is largely down to base effects. The disinflationary pressures should resume next time around.