US futures dip while bond yields and the dollar climb ahead of key inflation data
- US stock futures edged lower on Wednesday as investors awaited July's CPI inflation data.
- Bond yields and the dollar rose ahead of what is expected to be another jump in US prices.
- Traders will pore over the data for any signs about how it might influence the Federal Reserve.
US stock futures inched lower on Wednesday as investors awaited important inflation data that could influence Federal Reserve policy.
Meanwhile, the dollar and bond yields continued their recent run of strength, rising ahead of US consumer price index data that is expected to show that inflation jumped again in July.
S&P 500 futures were down 0.14% after the index climbed 0.1% to a record high on Tuesday. Dow Jones futures were 0.06% lower and Nasdaq 100 futures were off by 0.21%.
Equities were mixed in Asia overnight, with Tokyo's stock index up, but Shanghai's roughly flat. In Europe, the continent-wide Stoxx 600 rose 0.04% in early trading.
The US consumer price index has risen to 13-year highs and has become a major focus of investors and policymakers. The Federal Reserve is trying to gauge when to start reducing its support for a strong economy, and investors are parsing every data release for signs that could influence the central bank's thinking.
The data covering July is due at 8.30 a.m. ET. Economists predict CPI rose 0.5% month-on-month and 5.3% year-on-year, according to Bloomberg estimates, representing a slowdown on June's figures, but nonetheless one of the strongest pickups in inflation in over a decade.
The Federal Reserve has long said strong inflation should prove transitory. Investors will be watching which sectors are pushing up prices and weighing up whether they are likely to keep doing so.
"Given the run of very large upside surprises in recent months, the market would doubtless welcome a downside surprise as proof that the current period of well-above target inflation is likely to prove temporary as the Fed has claimed," Chris Scicluna of Daiwa Capital Markets said.
Jim Reid of Deutsche Bank said: "The breakdown will be very important, so let's see if more of the transitory inflation filters into non-COVID related sectors."
The dollar index climbed 0.07% to 93.13 on Wednesday to around its highest level since April, after a run of strong economic data in the US.
Bond yields also rose, with the key 10-year US Treasury note yield up 3 basis points to 1.373%, its highest since the middle of July.
"It looks like some traders might be building a bit of inflation into their positions," TD Ameritrade's chief market strategist JJ Kinahan said.
Elsewhere in markets, oil prices inched up after a volatile few days. Brent crude was 0.17% higher at $70.75 a barrel while WTI crude was up 0.1% at $68.30 a barrel.
Bitcoin rose 1.1% to $46,160 as investors continued to flock back to the crypto market after a rough run. The biggest cryptocurrency by market value stood below $30,000 per coin in the middle of July.