- Market sentiment remains dangerous amid the cautious mood ahead of key data.
- S&P 500 futures struggle to track Wall Street gains at one-month highs.
- US 10- and 2-year Treasury yields widened yesterday’s losses.
- Expectations that US inflation will soften while policymakers at the US Federal Reserve (Fed) defend rate hikes keep optimists hopeful.
Bulls and bears are jostling in the market ahead of Thursday’s all-important US inflation data. The recent mixed numbers for China’s consumer price index (CPI) and producer price index (PPI) for December, as well as an upbeat calendar elsewhere, may be adding to the market’s indecision.
While depicting the mood, S&P 500 futures struggled for clear direction at monthly highs of 3,991, while US 10-year Treasury yields were 2 basis points (bps) at press time. It dropped to 3.53%. It’s worth noting that his 2-year coupon in the US also tracks his 10-year coupon, showing a modest loss of about 4.21% at the latest.
That said, China’s headline consumer price index was in line at 1.8% y/y and 1.6% y/y, with the producer price index (PPI) at -1.3% compared to the previous figure and market consensus of -0.1%. A figure of 0.7% was recorded.
Elsewhere, Federal Reserve Bank of Boston Governor Susan Collins has backed smaller rate hikes, saying she is leaning towards a 25 bps rate hike at this stage. However, the policy also notes that it relies heavily on data. Earlier in the week, Fed Chairman Jerome Powell hesitated to communicate his monetary policy outlook, raising hopes of a policy turnaround.
On another page, early signs of China’s full economic reopening and holiday season mega-shopping lead to chatter that the People’s Bank of China (PBOC) will adhere to its 2023 rate cut and spread Beijing-inspired optimism. join.
Amid these moves, the US Dollar Index (DXY) remains under pressure around 103.10, down 0.13% during the day. WTI crude, meanwhile, remains indecisive near $77.70 after the day before he rose the most in two months.
Going forward, market players may see lackluster performance ahead of US inflation data. But hopes for weaker results and recent mixed comments from Fed policymakers have raised fears of a runaway just in case the actual outcome doesn’t disappoint. .
Also Read: US December CPI Preview: EUR/USD and USD/JPY Are Pairs to Watch