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Stock index futures are climbing Thursday on the heels of six-straight down days for the broader market. But direction will be dictated by consumer inflation figures.
S&P futures (SPX) +0.5%, Dow futures (INDU) +0.5% and Nasdaq 100 futures (NDX:IND) +0.3% are in the green.
If the S&P falls for a seventh-straight session is “would be the worst run for the index since February 2020 as fears about the global spread of Covid-19 ramped up,” Deutsche Bank’s Jim Reid said. “Whether that happens could largely hinge on today’s all-important CPI print from the US, which is the last big piece of data the Fed will get ahead of their next decision in just under 3 weeks’ time.”
“Bear in mind it was only last month that the stronger-than-expected reading on core CPI sparked a big re-evaluation about when the Fed would slow down their rate hikes, with futures pricing out the chances they’d adjust to 50bp hikes in November in favor of a continued 75bps pace,” he said. The S&P plunged 4% that day.
September CPI arrives at 8:30 a.m. ET with economists expecting annual headline inflation to ease back to 8.3%, but core CPI to revisit its peak at 6.5%. For the month, CPI is seen up 0.2% with core up 0.4%.”
“Almost a quarter of CPI is the fictitious owners’ equivalent rent measure – a price nobody pays,” UBS chief economist Paul Donovan said. “US homeowners have a lower cost of living than CPI suggests. Economists need the expertise of used-car dealers, with CPI influenced by the rapid slowdown in used-car prices. New car inflation is weird (last month the inflation was almost 33% y/y in Baltimore, and barely 6% in Los Angeles).”
Rates are unsurprisingly treading water ahead of the data. The 10-year Treasury yield (US10Y) is flat at 3.90% and the 2-year yield (US2Y) is up 1 basis point to 4.30%.
“The 10yr yield has popped above 4% twice in the past few weeks (for the second time yesterday), and seems reluctant to push on above,” ING said. “But in all probability should we see a 6.5% core CPI inflation reading confirmed today, it should provide enough ammunition for it to make the break above. Yes, it’s what is discounted. But confirmation still has real meaning.”
At the same time as CPI, weekly jobless claims figures are out. The forecast is for a rise to 225K.
Among active stocks, Duck Creek Technologies is jumping following earnings. Applied Materials is lower after cutting outlook.
