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US stock futures fell on Wednesday, while bond markets extended their historic December rally and the dollar maintained gains against global peers, as weak inflation data, as well as new signs of a resilient domestic economy, appear to support the Federal Reserve's pro-interest rate arguments. cuts.
On Tuesday, stocks closed stronger again, with the Dow hitting another record high and the S&P 500 rising to within one percent of its January 2022 high. The moves came on the back of strong homebuilding data in November and new bets from operators that interest rate cuts are coming.
Coming up on Friday is a key reading on domestic inflation, the Federal Reserve's preferred personal consumption spending price index.
Investors are therefore likely to focus this session on easing price pressures in Europe, with headline inflation falling to a two-year low in Britain and factory-gate (wholesale) inflation slowing more than what was expected in Germany.
The downward moves added fuel to the global bond market rally, which has seen US 10-year bond yields fall by the most since 2010, and boosted the case for Fed rate cuts to early spring.
The benchmark 10-year bonds were 4 basis points below last night's close at 3.89%, while the 2-year papers fell to 4.382%.
The US dollar index, which tracks the greenback's performance against a basket of six global currencies, rose 0.15% to 102.316 as both the pound and euro fell following their respective inflation readings.
Global oil prices were also active, with Brent crude prices surpassing the $80 mark for the first time in two weeks. Traders factored in the additional costs of diverting oil shipments from the Red Sea to the Cape of Good Hope following drone and missile attacks by Iran-backed Houthi rebels in Yemen.
Brent crude contracts for February delivery rose 87 cents to $80.15 a barrel. WTI futures contracts for January added $1.01 to trade at $74.95 a barrel.
On Wall Street, futures indicate a modestly softer opening, with the S&P 500 priced for a 9-point drop and the Dow Jones Industrial Average looking at a 31-point pullback. The technology-focused Nasdaq sees a 50-point drop.
In overseas markets, Europe's Stoxx 600 rose 0.06% in early trading in Frankfurt, while Britain's FTSE 100 rose 0.6% in London.
Overnight in Asia, Japan's Nikkei 225 closed at a new 33-year high of 33,675.94 points, with a year-to-date gain of around 31%, following yesterday's dovish decision on interest rates. Bank of Japan.
Meanwhile, the MSCI regional benchmark excluding Japan rose 0.17% at the close of trading.
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