US Stock Futures Muted Before High-Stakes CPI Data: Markets Wrap

This content was published on February 12, 2025 - 13:36

5 minutes

(Bloomberg) — US equity futures contracts kept to narrow ranges as traders looked forward to a key US inflation print later for clues on the outlook for interest-rate cuts.

S&P 500 futures slipped 0.1%. European stocks were supported by positive earnings news. An index of Asian shares advanced.

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Treasury yields edged higher, with the 10-year adding a basis point to 4.55%. Yields have been elevated since data late last week showed a healthy US labor market and supported the Federal Reserve’s patient stance on any further rate reductions. An index of dollar strength edged higher.

The stakes for markets are high going into Wednesday’s consumer price index numbers. Economists expect so-called core CPI excluding food and energy to rise 0.3% from the previous month in January, picking up from an increase of 0.2% in December.

“We have to watch 10-year Treasury yields very carefully,” said Kenneth Broux, a strategist at Societe Generale in London. Hotter-than-expected inflation could easily push the yield to 4.60% “and the whole risk-on trade will be back on hold,” he said.

The trading desk at JPMorgan Chase & Co. Market Intelligence estimates the S&P 500 will fall as much as 2% should the January consumer price index reading show an increase of 0.4% or more from the previous month.

“Expect the bond market to react violently as it shifts its view to Fed Funds not being restrictive and the most likely next action of the Fed to be a hike rather than a cut,” the team led by Andrew Tyler wrote in a note. “The move in bond yields would pull the USD higher, further pressuring stocks.”

The figures are due shortly before the second half of a two-day testimony marathon for Fed Chair Jerome Powell, who yesterday told lawmakers the central bank is in no rush to adjust rates again.

“Until we get greater clarity on the medium-term inflation trends, bond yields are likely to remain sticky,” said Daniel Murray, Zurich-based chief executive officer of EFG Asset Management. “It is also clearly impacting equity investor sentiment, in particular in the US, where the combination of more hawkish rate expectations alongside tariff uncertainty has contributed to a rangebound market.”

Elsewhere in currencies, the yen weakened for a third day, the worst performer among its Group-of-10 peers, on concerns over US President Donald Trump’s trade-tariff measures. The Japanese government asked Trump on Wednesday to exempt the nation’s companies from his fresh tariffs.

Corporate Highlights:

Heineken NV shares surged 13% after the brewer announced a buyback and reported strong beer sales including in Brazil and Mexico, helping the company gain ground on rivals in more than half of its key markets.
ABN Amro Bank NV’s shares soared as much as 8.9% after the Dutch lender’s net interest income and fees grew by double digits in the fourth quarter.
CVS Health Corp. issued profit guidance for the year just below Wall Street’s expectations as high health-care costs and limited government payments continue to beset the insurance business.
Lyft Inc. fell in premarket trading after giving a disappointing outlook for first-quarter gross bookings, warning that cold weather has hurt demand for ride hails and bike rentals.
Super Micro Computer Inc. rose in premarket trading after giving an aggressive long-term revenue outlook and saying it “believes” it will meet a Nasdaq Inc. deadline to file audited financial results.
DoorDash Inc., the largest food delivery service in the US, issued an outlook for orders in the first quarter that surpassed Wall Street’s expectations, serving as yet another sign that consumer demand remains resilient.

Key events this week: