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U.S. equity futures nudged higher Tuesday, matching a modest uptick in Treasury bond yields, as investors appear unlikely to extend the recent tech-led rally ahead of key economic data releases later in the week.
Stocks ended lower Monday, with the S&P 500 falling for the first time in four trading days, amid minimal headline drivers and a light calendar for corporate and economic releases.
Treasury yields, however, were active in the wake of two benchmark auctions, which saw record sales of 2-year and 5-year notes over the same session.
The overall $127 billion in supply was taken down relatively smoothly, however, with only a modest dip in demand metrics, suggesting that investors are content to remain cautious over the coming days, and possibly weeks, until they get more clarity from the Federal Reserve on its near-term interest-rate path.
Kansas City Fed President Jeffrey Schmid, speaking to an event in Oklahoma last night, suggested investors will need to settle in for a good few weeks before that happens, given the strength of the economy, the resilience of the labor market and elevated inflation.
“I believe that the best course of action is to be patient, continue to watch how the economy responds to the policy tightening that has occurred, and wait for convincing evidence that the inflation fight has been won,” Schmid said.
The CME Group’s FedWatch suggests no chance of a Fed rate move in March and only a 17.4% chance of a reduction in the central bank’s main lending rate in May.
Traders are, however, betting on rate cuts to begin in June, assigning a 53.3% chance of a quarter point reduction and a 9.6% chance of a half-point cut.
On Wall Street, stocks look set for another muted open, with only a few blue-chip names seeing action in premarket trading, including Lowe’s Companies (LOW) , which edged 0.6% lower after posting better-than-expected January-quarter earnings but issuing a muted 2025 sales forecast.
Coinbase Global (COIN) was also active, along with Robinhood Markets (HOOD) , after bitcoin prices topped the $57,000 mark for the first time since 2021 as the world’s largest digital currency continues to see investor demand tied to the approval of spot-price ETFs earlier this year.
Macy’s (M) shares, meanwhile, fell 0.6% after the retailer posted better-than-expected fourth-quarter earnings while unveiling a major strategy shift that will see it close 150 stores while expanding its upscale Bloomingdale’s presence.
In broader markets, futures tied to the S&P 500 are indicating a 9 point opening-bell gain while those linked to the Dow Jones Industrial Average suggest a 38 point advance. The Nasdaq is called 65 points higher.
Overnight in Asia, Japan’s Nikkei 225 extended its run of records, rising 0.015% to 39,239.52 points. That’s even after data showed a faster-than-expected reading for February inflation that could test the Bank of Japan’s negative rate policy over the coming months.
In Europe, the regionwide Stoxx 600 was marked 0.03% lower in Frankfurt while Britain’s FTSE 100 slipped 0.03% in London.
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