Mario Tama
Stock index futures are indicating a higher open on Friday, capping off a triumphant shortened week driven by the profound growth of stocks.
Bullish Futures
Nasdaq 100 futures (NDX:IND) +0.8%, S&P futures (SPX) +0.4% and Dow futures (INDU) +0.2% are all showing upward trends.
“Risk assets found a firmer footing over the last 24 hours, with the S&P 500 posting a solid recovery as an upbeat 2024 outlook by chipmaker TSMC drove an outperformance from tech stocks that saw the Magnificent 7 reach a new all-time high,” cited Deutsche Bank’s Jim Reid. “By contrast, bonds continued to struggle, and the 10yr Treasury yield hit a one-month high of 4.14% after US data continued to surprise on the upside.”
Market Movement
Info Tech is the leading sector premarket, with all the Magnificent 7 save Tesla (TSLA) in the green.
As Friday’s trading session commences, the S&P 500 (SP500) is down 0.1% for the week. The Nasdaq (COMP.IND) is up 0.6%, and the Dow (DJI) is down 0.3%.
Steady Rates and Speculations
Rates were steady. The 10-year Treasury yield (US10Y) is at 4.14%, and the 2-year yield (US2Y) remained relatively unchanged at 4.36%.
“Based off what we see, there is a path to 4.25% for the US 10yr,” ING said. “We won’t get back up to the prior high at 5%. But this edge off recent turn of the year sub-4% extremes makes a lot of sense to us.”
“It plays off the unwind of the rate cut discount. It leaves a bigger bond rally ahead as we continue to target 3.5% around mid-year. But for now, we continue to play the market from the short side,” ING added.
Upcoming Indicators
Shortly after the start of trading, the preliminary University of Michigan consumer sentiment figures for January are due. The forecast is for little change in the headline number at 70.
The one-year and five-year inflation expectations will also be closely watched after big drops in December.
“Month-to-month swings in inflation expectations are mostly noise, but the bigger picture is that they remain slightly above their pre-Covid trend, of about 2.5%,” Pantheon Macro stated. “Even longer-term inflation expectations are sensitive to current inflation, though, so we anticipate a further downshift over the next few months.”
At the same time, December existing home sales numbers are anticipated to be released, with economists expecting little change at a rate of 3.82M.
Regulatory Input
Fed Vice Chairman Michael Barr is scheduled to speak this afternoon, although not much on monetary policy is expected.
“Barr is speaking on bank regulation,” noted UBS’s Paul Donovan. “Bank regulation is often the forgotten pillar of central bank policy (monetary, quantitative, regulatory), but might start to matter more. Issues like ‘buy now, pay later’ credit are causing concern, and regulators have yet to respond to last year’s Twitter-era bank runs.”
