US Stock Futures Move Higher Ahead of PPI Inflation Data

US stock futures are moving higher ahead of the release of the PPI inflation data, which is expected to show a slight increase in prices.

The data is due to be released at 8:30 AM ET, and investors are keeping a close eye on it as it can have a significant impact on the markets.

The PPI inflation rate has been steadily increasing over the past few months, and this latest data is expected to continue that trend.

This increase in inflation could lead to higher interest rates, which could in turn affect the stock market.

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US Stock Futures are trending up, with March S&P 500 E-Mini futures climbing +0.24% this morning.

The S&P 500 and Nasdaq-100 futures are also higher, opening 0.20% and 0.17% firmer, respectively.

Dow Jones futures are up 0.21% ahead of the bell, following a late-day tech rally that lifted stocks from their session lows on Wednesday.

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The Dow closed 124.75 points higher on Wednesday, with Applied Materials Inc (AMAT) climbing over +12% in pre-market trading after reporting upbeat Q1 results and providing strong Q2 guidance.

United States 10-year rates are at 4.268%, up +0.71%, in the bond markets.

Investors are looking ahead to crucial U.S. PPI data for clues on the Federal Reserve's rate path, with economists forecasting a 0.1% m/m increase in the January U.S. PPI.

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September rate cut expectations barely budged, despite the hotter-than-expected wholesale inflation data.

Odds of a quarter percentage point cut to 4.00%-4.25% coming next month fell to 92.7%, down from 94.3% one day prior.

The likelihood of a double cut, to 3.75%-4.00%, dropped to zero, from 5.7% one day ago, according to the CME FedWatch Tool.

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The latest wholesale inflation data showed a 0.9% jump in goods and services prices, more than the 0.2% gain expected by analysts.

Odds of a quarter percentage point cut to 4.00%-4.25% coming next month fell to 92.7%, down from 94.3% one day prior.

Expectations for a double cut were removed, with the likelihood of a cut to 3.75%-4.00% dropping to zero from 5.7% the day before.

A half percentage point cut was also ruled out, with no change in expectations for this scenario.

Fed funds futures pricing shows a 92.7% chance of a quarter percentage point cut next month, a slight decrease from the previous day.

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Market volatility is a concern for investors, with UBS warning that market swings could pick up quickly if trade tensions escalate significantly.

The VIX index of implied stock volatility has fallen to its lowest level since December last year.

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Market pricing of Fed cuts has been vindicated by dovish comments from a few FOMC members, but Chair Powell's view matters far more than anyone else's.

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The producer price index (PPI) is a key indicator of inflation, and today's data is expected to be a crucial one. Economists forecast that the January U.S. PPI will stand at +0.1% m/m and +0.6% y/y, compared to the previous values of -0.1% m/m and +1.0% y/y.

The PPI measures the change in prices of goods and services before they reach the consumer, and a higher reading can indicate rising inflation. This data will likely have a significant impact on the market's expectations for future interest rate cuts.

Atlanta Fed President Raphael Bostic has expressed caution on inflation, stating that it remains uncertain whether inflation is heading sustainably toward the central bank's 2% target. He noted that the evidence from data, surveys, and outreach suggests that victory is not clearly in hand, and leaves him not yet comfortable that inflation is inexorably declining to the 2% objective.

The market is pricing in an 8.5% chance of a 25 basis point rate cut at the next central bank meeting in March and a 32.3% chance of a 25 basis point rate cut at the May meeting. This suggests that investors are still expecting some accommodation from the Fed, but are not yet convinced that a rate cut is imminent.

In the bond markets, United States 10-year rates are at 4.268%, up +0.71%. This indicates a slight increase in yields, which can be a sign of rising inflation expectations.

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The US stock futures are trending up this morning, with S&P 500 E-Mini futures increasing by +0.24%.

Investors are looking ahead to crucial US PPI data for clues on the Federal Reserve's rate path.

US retail sales fell -0.8% m/m in January, weaker than expectations of -0.2% m/m, and the biggest decline in 10 months.

The Philadelphia Fed's gauge of manufacturing activity rose to a 6-month high of 5.2 in February, stronger than expectations of -8.0.

US rate futures have priced in an 8.5% chance of a 25 basis point rate cut at the next central bank meeting in March and a 32.3% chance of a 25 basis point rate cut at the May meeting.

The US Producer Price Index is expected to stand at +0.1% m/m and +0.6% y/y in January, compared to the previous values of -0.1% m/m and +1.0% y/y.

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