S&P, Nasdaq, Dow Futures on the Rise
Stock index futures are pointing to a higher open on Thursday as the rates markets continue to retrace from the post-CPI surge in yields.
S&P futures (SPX) are up 0.2%, Nasdaq 100 futures (NDX:IND) rose 0.1%, and Dow futures (INDU) increased by 0.2%.
Yields have been slipping after some dovish comments from the Fed on Wednesday, and the chance of a March rate cut has edged back above 10% after being close to zero following the hot retail inflation figures. “As Chicago Fed President Goolsbee reminded markets yesterday, the Fed’s inflation goal is based on the core PCE number, and not CPI,” said Deutsche Bank’s Jim Reid.
The Impact of Dovish Fed Speak
Yields on the 10-year Treasury (US10Y) fell 4 basis points to 4.23%, while the 2-year yield (US2Y) dropped 1 basis point to 4.57%. The 10-year “tapped out on kissing 4.33% (a key technical level),” according to ING. The day’s theme from retail sales and industrial production is expected to be relatively mild, leading into Friday’s sub-2% producer price inflation and confirmation of sub-3% inflation expectations.
Anticipating January Retail Sales Figures
Investors are eagerly waiting for January retail sales figures, which are expected to show a 0.2% decline, with core sales, excluding autos, rising 0.2%. UBS’ Paul Donovan cautioned against shorting the spending power of US consumers, emphasizing the foolhardiness of such an approach without considering the consumer’s hedonism and spending on leisure activities.
What Else to Expect
Furthermore, weekly initial jobless claims are due, with little change expected at 219K. Two Fed manufacturing measures for February are also set to be released, with the Empire State manufacturing index seen rising to -13.7 and the Philly Fed forecasted to have risen to -8. January industrial production is expected to rise by 0.2%, and business inventories for December and the February NAHB housing market index are also due around the start of trading.
