Markets in a holding pattern as CPI data looms
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Equities & Market Sentiment
European stock futures point to a positive open, driven by solid corporate earnings and a shift in investor flows from U.S. equities amid concerns over tech momentum. Despite tariff uncertainties, markets remain focused on upcoming U.S. inflation data, which will shape the Fed’s rate trajectory. Nasdaq futures are flat, S&P 500 futures are slightly lower, while the Euro Stoxx 50 and DAX show resilience, reflecting expectations of a strong earnings cycle in Europe.
Rates & Central Banks
U.S. Treasury yields continue to rise, with the 10-year at 4.556% and the 2-year at 4.302%, signaling diminished expectations for aggressive Fed rate cuts. Powell’s measured tone reinforced a wait-and-see approach, with markets largely pricing out rate cuts before mid-year unless inflation softens significantly.
FX & Tariff Developments
The Dollar rally has stalled, with the euro stabilizing at $1.0359 and sterling at $1.2446. Trump’s new tariff push has drawn strong reactions from the EU, Canada, and Mexico, though markets remain skeptical about their full implementation timeline. The Japanese Yen weakened beyond 153.65, reflecting rising U.S. yields and continued BoJ divergence.
Commodities & Macro Themes
Oil prices have retreated, with Brent crude at $76.71 and WTI at $73.01, as geopolitical risk fades. Spot gold holds near record highs at $2,888.25, reinforcing persistent inflation hedging demand.
Market Strategy & Outlook
Investor attention is firmly on U.S. CPI data due later today, which will dictate the next major move in yields and risk assets. A hot print could extend the dollar’s strength and push equities lower, while a weaker-than-expected number could reignite Fed rate cut bets and support growth stocks.
European stock futures point to a positive open, driven by solid corporate earnings and a shift in investor flows from U.S. equities amid concerns over tech momentum. Despite tariff uncertainties, markets remain focused on upcoming U.S. inflation data, which will shape the Fed’s rate trajectory. Nasdaq futures are flat, S&P 500 futures are slightly lower, while the Euro Stoxx 50 and DAX show resilience, reflecting expectations of a strong earnings cycle in Europe.
Rates & Central Banks
U.S. Treasury yields continue to rise, with the 10-year at 4.556% and the 2-year at 4.302%, signaling diminished expectations for aggressive Fed rate cuts. Powell’s measured tone reinforced a wait-and-see approach, with markets largely pricing out rate cuts before mid-year unless inflation softens significantly.
FX & Tariff Developments
The Dollar rally has stalled, with the euro stabilizing at $1.0359 and sterling at $1.2446. Trump’s new tariff push has drawn strong reactions from the EU, Canada, and Mexico, though markets remain skeptical about their full implementation timeline. The Japanese Yen weakened beyond 153.65, reflecting rising U.S. yields and continued BoJ divergence.
Commodities & Macro Themes
Oil prices have retreated, with Brent crude at $76.71 and WTI at $73.01, as geopolitical risk fades. Spot gold holds near record highs at $2,888.25, reinforcing persistent inflation hedging demand.
Market Strategy & Outlook
Investor attention is firmly on U.S. CPI data due later today, which will dictate the next major move in yields and risk assets. A hot print could extend the dollar’s strength and push equities lower, while a weaker-than-expected number could reignite Fed rate cut bets and support growth stocks.