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Stock index futures were cautious Tuesday after the S&P notched another record close.
S&P futures (SPX) +0.1%, Nasdaq 100 futures (NDX:IND) +0.1% and Dow futures (INDU) were up slightly.
The last “10-day trend of Q1 (Fed) rate cut expectations being priced out continued,” Deutsche Bank’s Jim Reid said. “Indeed, futures are now pricing in just a 42% chance of a Fed rate cut by March (49% Friday), which is a big shift from the end of 2023, when a cut by March was fully priced in. Even intraday on January 12th there was an 88% probability.”
The 10-year Treasury yield (US10Y) rose 4 basis points to 4.13%. The 2-year yields (US2Y) rose 3 basis points to 4.41%.
“Markets have their eyes on a 2.0% core PCE inflation, in line with the Fed’s mandate,” ING said. “If, on the other hand, the actual number were to exceed 2.0%, even by a bit, we could imagine the market reacting more sensitively to such a disappointment. Similarly, we would expect an asymmetric reaction to the GDP growth figures, which our economist expects to come in firm on Thursday.”
