US stock futures waver in lead-up to CPI print: Markets Wrap

by Andre Janse van Vuuren

US stock futures edged higher, mirroring the subdued tone across most asset classes, as investors stayed on the sidelines ahead of Tuesday’s inflation report that could reshape expectations for interest rate cuts.

Contracts for the S&P 500 rose 0.2%. The dollar traded flat. US Treasuries saw muted action with the yield on 10-year notes dropping less than one basis point to 4.28%. Gold ticked higher.

Europe’s Stoxx 600 index rose 0.3% as luxury names outperformed after Washington extended a trade truce with Beijing. A gauge for Asian stocks advanced 0.5%.

Tuesday’s inflation report arrives after traders in recent weeks ramped up expectations for Federal Reserve policy easing this year, aiming to bolster a labor market showing signs of softening. Still, investors remain attuned to the risk of persistent price pressures — particularly in the face of shifting US tariff policies — and the potential for a stagflationary backdrop.

Money markets show traders have priced in more than two rate cuts by December, with about an 80% probability of a quarter-point reduction next month. The core consumer price index, regarded as a measure of underlying inflation because it strips out volatile food and energy costs, is expected to show a 0.3% increase for July, compared to 0.2% in the previous month.

“If we get a continued slowdown in the employment picture, we expect the Fed to deliver rate cuts even in the face of sticky inflation,” said Mohit Kumar, chief European strategist at Jefferies International. “However, a sticky inflation picture will prevent an aggressive easing policy.”

Markets Live Strategist Garfield Reynolds says:

Global equities look nervous heading into Tuesday’s US CPI release, given the potential the data could disrupt expectations for Fed interest-rate cuts that have helped to prop up risk appetite in the US and beyond. Asian stocks may face a more perilous risk-reward set up given this local investor hesitance.

Meanwhile, China urged local companies to avoid using Nvidia’s H20 processors, particularly for government-related purposes. The move will complicate the chipmaker’s attempts to recoup billions in lost China revenue as well as the Trump administration’s unprecedented push to turn those sales into a US government windfall.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.3% as of 8:28 a.m. London time
• S&P 500 futures rose 0.2%
• Nasdaq 100 futures rose 0.1%
• Futures on the Dow Jones Industrial Average rose 0.2%
• The MSCI Asia Pacific Index rose 0.5%
• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1616
• The Japanese yen fell 0.1% to 148.32 per dollar
• The offshore yuan was little changed at 7.1956 per dollar
• The British pound rose 0.1% to $1.3446

Cryptocurrencies

• Bitcoin rose 0.2% to $119,132.36
• Ether rose 1.6% to $4,314.48

Bonds

• The yield on 10-year Treasuries was little changed at 4.28%
• Germany’s 10-year yield was little changed at 2.70%
• Britain’s 10-year yield advanced three basis points to 4.60%

Commodities

• Brent crude rose 0.4% to $66.89 a barrel
• Spot gold rose 0.1% to $3,347.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

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