Futures, stocks mixed as traders weigh policy path

Bloomberg

American stock-index futures were mixed on Wednesday as investors evaluated a surprise US inflation jump that stirred the debate on how long the Federal Reserve will maintain ultra-loose policy.
Contracts on the S&P 500 fluctuated, while those on the Nasdaq 100 gained after US tech giant Apple Inc. was said to have prepared suppliers for
a boost in next-generation iPhone sales. US releases showed the highest inflation since 2008, as well as mixed earnings from JPMorgan Chase & Co. and Goldman Sachs Group Inc. Companies set to report Wednesday include CitiGroup Inc, Bank of America Corp and Wells Fargo & Co.
The 10-year US Treasury yield retreated to about 1.4% and the dollar trimmed gains after the surge. The Stoxx Europe 600 index declined, led by utilities and travel and leisure companies. Avanza Bank Holding AB plunged more than 10% after reporting a second-quarter earnings miss. The pound gained and gilts falls after UK consumer prices accelerated more than
analysts’ expectations in June.
The June US inflation print topped all forecasts and pointed to higher costs associated with the reopening from the pandemic. Fed officials have said they expect such pressures to be transitory but some commentators see a risk of more durable increases that could force a quicker-than-expected reduction in stimulus. Traders will be scrutinising testimony from Fed Chair Jerome Powell to the Senate Banking Committee.
“Outside of the CPI print, which has reinvigorated the Fed’s policy debate, global factors remain generally supportive of risk,” said Nema Ramkhelawan-Bhana, an analyst at Rand Merchant Bank in Johannesburg. “The chairman is likely to retain a dovish tone during his testimony, maintaining a view that inflation is
transitory.”
Global stocks remain close to a record and a range of other factors are influencing the outlook. They include the spread of the more contagious Covid-19 delta variant, the possibility
of a peak in earnings and
economic growth, and US fiscal spending plans.
On the latter, Senate Democrats on the Budget Committee agreed to set a top line of $3.5 trillion for a bill to carry most of President Joe Biden’s economic agenda into law without Republican support. Adding in the bipartisan infrastructure plan takes the long-term agenda past $4 trillion.
Oil edged down after touching the highest in more than 2 1/2 years on signs of a rapidly tightening global market.
Futures on the S&P 500 were little changed as of 5:22 am New York time and futures on the Nasdaq 100 rise as much
as 0.3%.
While futures on the Dow Jones Industrial Average were little changed, the Stoxx Europe 600 falls 0.3% and the MSCI World index falls 0.2%.
The Bloomberg Dollar Spot Index falls 0.1% and the euro was little changed at $1.1783. While the British pound rises 0.2% to $1.3847, the Japanese yen rises 0.1% to 110.47 per dollar.
The yield on 10-year Treasuries declined two basis points to 1.39% and Germany’s 10-year yield was little changed at -0.29%. Britain’s 10-year yield advanced four basis points to around 0.67%
While West Texas Intermediate crude fell 0.7% to $74.72 a barrel, gold futures rose 0.3% to $1,814.90 an ounce.