(Bloomberg) — Treasury yields rose off their lows while stocks struggled to make a comeback after a reading of a key US inflation gauge reinforced Wall Street’s conviction in rate cuts as soon as March.
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Futures on the US Nasdaq 100 and S&P 500 edged higher after the US core personal consumption expenditures price index — the Fed’s preferred core inflation metric — fell to 3.2% last month, according to a Bureau of Economic Analysis report Friday. Economists surveyed by Bloomberg predicted it would slip to 3.3% in November.
Swaps traders are betting interest rates will be eased by as much as 155 basis points next year, double the Fed’s forecast. The S&P 500 has struggled to hold onto a weekly gain that would put it on track for an eight-week winning streak — its longest in more than five years.
Among equity-market movers, Nike Inc., fell more than 12% in New York premarket trading, after the sports apparel maker said it’s looking for as much as $2 billion in cost savings amid a weaker sales outlook.
Treasury trading lack conviction with the yield on the US 10-year bond sliding two basis points.
“We’ll argue the market was biased for a downside surprise which has translated to a somewhat counterintuitive price response” Ben Jeffrey of BMO Capital Markets wrote. “We expect the proximity to the early close and long weekend will usher in a long winter’s nap for Treasuries.”
The core PCE readout was among the last US dataprints before the long Christmas weekend, alongside figures on new home sales, also due later Friday.
The US dollar’s drop eased, but the currency remains at five-month lows against its Group-of-10 rivals at the prospect of near-term rate hikes.
Oil prices extended their biggest weekly gain in two months, as shippers took lengthy detours to avoid militant attacks in the Red Sea. Brent crude futures traded near $80 a barrel, set for a weekly gain of almost 5%.
Key events this week:
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US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.2% as of 9:03 a.m. New York time
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Nasdaq 100 futures rose 0.2%
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Futures on the Dow Jones Industrial Average fell 0.2%
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The Stoxx Europe 600 rose 0.1%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.2% to $1.1030
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The British pound rose 0.4% to $1.2737
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The Japanese yen was little changed at 142.01 per dollar
Cryptocurrencies
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Bitcoin fell 0.7% to $43,707.3
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Ether rose 2.9% to $2,313.49
Bonds
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The yield on 10-year Treasuries declined three basis points to 3.86%
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Germany’s 10-year yield was little changed at 1.96%
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Britain’s 10-year yield declined two basis points to 3.50%
Commodities
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West Texas Intermediate crude rose 0.8% to $74.49 a barrel
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Spot gold rose 1.1% to $2,068.28 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao, Divya Patil and Michael Msika.
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