U.S. Stock Futures Steady; Treasuries Rise on CPI: Markets Wrap

U.S. Stock Futures Steady; Treasuries Rise on CPI: Markets Wrap
Andreea Papuc and Adam Haigh

(Bloomberg) -- U.S. equity futures were steady Thursday as investors assessed the implications of weaker than expected American inflation data for the so-called reflation trade that bets on a recovery from the pandemic.

S&P 500 contracts were little changed after the index ended virtually flat near a record high. The 10-year Treasury yield fell back to 1.12% Wednesday after U.S. core consumer prices signaled scant inflation. U.S. bond futures edged higher, with cash Treasuries closed until the London open due to a holiday in Japan. A gauge of Asian stocks was steady, with markets in China and South Korea also closed.

The dollar held losses in the wake of the inflation report. Crude oil slipped after a spell of gains.

The CPI data are part of a debate in financial markets over the course of inflation. Despite the muted January figure, some investors continue to expect intensifying price pressures in the months ahead as President Joe Biden pushes for major stimulus and more vaccinations allow virus-related restrictions to be eased, spurring consumer spending.

“While inflation is not showing up in the data right now, inflation is on its way thanks to fiscal and monetary stimulus and pent-up consumer demand that should intensify as the economy reopens,” Nancy Davis, founder of Quadratic Capital Management, said in a note.

In a speech Wednesday, Federal Reserve Chair Jerome Powell said the U.S. job market remains a long way from a full recovery and called on both lawmakers and the private sector to support workers. He also said it will require more than supportive monetary policy for the central bank to achieve and sustain maximum employment.

Meantime, President Biden and Chinese President Xi Jinping are preparing to speak within hours for the first time since the new administration in Washington took office last month, according to two people familiar with the matter.

On the virus front, a World Health Organization panel recommended AstraZeneca Plc’s vaccine for all adults over 18, paving the way to speed up inoculations in developing nation’s. The daily number of new coronavirus cases in the U.S. was under 100,000 for a third consecutive day, the first time that’s happened since the week of Nov. 2.

Here are some key events coming up:

Lunar New Year public holidays begin in nations across Asia, with China breaking for a week.Bank of Russia’s policy decision comes Friday.

These are the main moves in markets:

Stocks

S&P 500 futures were steady as of 9:13 a.m. in Tokyo. The S&P 500 Index closed little changed.Australia’s S&P/ASX 200 Index fell 0.1%.Hong Kong’s Hang Seng Index futures dipped 0.3% earlier.

Currencies

The yen was at 104.64 per dollar.The offshore yuan was at 6.4294 per dollar.The Bloomberg Dollar Spot Index was little changed.The euro was steady at $1.2118.

Bonds

The yield on 10-year Treasuries fell about three basis points to 1.12% Wednesday.Australia’s 10-year bond yield fell three basis points to 1.19%.

Commodities

West Texas Intermediate crude slid 0.6% to $58.36 a barrel.Gold shed 0.1% to $1,841.33 an ounce.

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