IND - Nasdaq futures keep charging forward; S&P Dow futures up ahead of CPI

2023-06-13 04:26:25 ET

Stock index futures are keeping bullish momentum going as cash keeps moving into tech and growth.

Nasdaq 100 futures ( NDX:IND ) +0.7% are in the lead again. S&P futures ( SPX ) +0.4% and Dow futures ( INDU ) +0.1% are up, but more cautious with the May inflation data to come.

"Markets have remained buoyant as we arrive at the start of a pivotal few days on the macro calendar," Deutsche Bank's Jim Reid. "In fact, for the first time since January 2022, we’re able to write that the S&P 500 ( SP500 ) closed at a one-year high, having now surpassed its local peak from last August during the bear-market rally."

"Furthermore, the risk-on tone has led investors to move out of sovereign bonds, and another milestone from yesterday was that the 2yr real Treasury yield closed at a post-GFC high of 2.51%," Reid said. "Now of course, if you wanted to play devil’s advocate, this is still an incredibly narrow rally that’s been predominantly led by big tech stocks. For example, the equal-weighted version of the S&P 500 ( RSP ) still hasn’t regained its levels prior to SVB’s collapse in March, so we’re not seeing broad-based gains for the index just yet."

Rates are tilting to bets on cooler inflation. The 10-year Treasury yield ( US10Y ) fell 4 basis points to 3.73%. The 2-year yield ( US2Y ) fell 3 basis points to 4.56%.

The May CPI arrives before the bell. Economists expect the headline CPI to have risen by 0.2% with the annual rate dropping to 4.1%. The core CPI is forecast to have risen by 0.4%, falling to a 5.3% annual pace.

"It is worth remembering that this is not news to parts of the US - areas like New York and Los Angeles have seen the headline inflation rates collapse this year, and are already experiencing sub-4% inflation," UBS' Paul Donovan wrote. "This rapid disinflation argues against the inevitability of price stickiness."

"The core consumer price measure is likely to be supported by the fictitious owners’ equivalent rent, and volatile used car prices. Any US household that owns its own home but is not buying a used car has a cost of living experience below that of consumer price inflation. It thus has more spending power. This covers almost two thirds of US households."

The market is pricing in a 75% chance the Fed holds rates steady on Wednesday.

"The upshot for traded interest rates, such as swaps and US Treasury yields, is that the market reassessing June hike odds lower will not necessarily mean a drop in longer-dated rates," ING said. "In fact, investors may well draw the logical conclusion that 0.4% core inflation would reinforce the case for a higher Fed dot plot and hawkish tone, regardless of what consensus is for today’s core inflation print."

Among active stocks, Oracle ( ORCL ) rallied post-earnings with help from cloud growth .

More on the markets

• S&P 500: Renewed Optimism Suggests That A Pullback May Be On The Cards
• Goldman more bullish, Morgan Stanley still bearish
• UBS: ‘We continue to expect a hard landing’

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