Stocks, Bonds Steady Ahead of US CPI Revision Data: Markets Wrap

(Bloomberg) -- Global markets were treading water on Friday before the release of US inflation data that could shift the narrative of the Federal Reserve’s fight against inflation. The US is expected to release its annual revisions to its consumer price index at 8:30 a.m. New York time. Last year, the update was significant enough to cast doubt on overall inflation progress and traders were speculating again that the recalculations might sway views over when the Federal Reserve will cut interest rates. “This could have important implications for the Fed,” wrote analysts at Rabobank in a research note. “It could increase or decrease the confidence that the FOMC has in a sustainable return to 2% inflation.” Europe’s Stoxx 600 and US stock-index futures were little changed. Ten-year Treasuries held steady, leaving their yield up about 15 basis points in the past five days. The next key data point will be the regular US inflation print due Tuesday. L’Oreal shares tumbled 7% as Chinese shoppers reined in travel spending, while Tesco Plc advanced after Barclays Plc said it will acquire much of the supermarket chain’s banking business. Bond traders have spent the week juggling a string of well-received US debt sales against cautious language on rate cuts from central bank policy makers. Fed Chair Jerome Powell’s pushback on a March reduction has left the bond market in limbo —- encouraging derivative trades that bet on a dip in bond market volatility. In stocks, the S&P 500 briefly hit 5,000 for the first time on Thursday before closing little changed. US equities have posted only one weekly drop since late October and the gauge has more than doubled from its March 2020 pandemic-low — driven by expectations for a soft economic landing and optimism about the impact of artificial-intelligence. “The equity market is responding to the positive data story and quite incredibly continues to march on,” said Charles Diebel, at Mediolanum International. “If growth holds up and there is a soft or no landing, that’s good for equities. And if something bad happens, the Fed will cut rates.” According to Bank of America Corp.’s Michael Hartnett, the rally is getting close to triggering sell signals. The bank’s custom bull-and-bear indicator is nearing a reading that could be interpreted as a contrarian signal to sell, he said. Listen to the Big Take podcast on iHeart, Apple Podcasts and Spotify. Read the transcript here. In Asia, markets were shut for the Lunar New year holidays in mainland China, Taiwan, South Korea, Indonesia, the Philippines and Vietnam. The Japanese yen steadied after slipping 0.8% against the greenback on Thursday, in the wake of comments from a Bank of Japan deputy governor suggesting the central bank will be in no rush to shift its easy policy settings. Corporate Highlights: Barclays agreed to buy Tesco’s retail banking unit, which includes credit cards, unsecured personal loans, deposits and the operating infrastructure, according to a statement. Hermes sales surged at the end of last year as the Birkin bag maker weathered the slowdown in demand for luxury goods with its unique model driven by scarcity. Grab Holdings Ltd. and GoTo Group, Southeast Asia’s biggest ride-hailing companies, have restarted talks for a merger, a potential blockbuster combination aimed at staunching years of losses at both companies resulting from tough competition between the two. Key events this week: US CPI revisions, Friday Germany CPI, Friday President Joe Biden hosts German Chancellor Olaf Scholz at the White House, Friday Some of the main moves in markets: Stocks The Stoxx Europe 600 rose 0.1% as of 10:16 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures rose 0.2% Futures on the Dow Jones Industrial Average were little changed The MSCI Asia Pacific Index fell 0.2% The MSCI Emerging Markets Index fell 0.3% Currencies The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.0763 The Japanese yen was little changed at 149.41 per dollar The offshore yuan was little changed at 7.2151 per dollar The British pound was little changed at $1.2606 Cryptocurrencies Bitcoin rose 2.9% to $46,646.17 Ether rose 1.8% to $2,468.27 Bonds The yield on 10-year Treasuries advanced one basis point to 4.17% Germany’s 10-year yield was little changed at 2.36% Britain’s 10-year yield was little changed at 4.05% Commodities Brent crude rose 0.1% to $81.72 a barrel Spot gold fell 0.2% to $2,031.27 an ounce This story was produced with the assistance of Bloomberg Automation. --With assistance from Abhishek Vishnoi, Divya Patil, Richard Henderson and Sujata Rao. ©2024 Bloomberg L.P.

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