Scott Olson
Stock index futures ticked higher while yields climb on Thursday morning after Wall Street received the latest round of CPI data.
S&P futures (SPX) were +0.1%, Nasdaq 100 futures (NDX:IND) were +0.1%, and Dow futures (INDU) were +0.1%.
A hotter-than-expected PPI on Wednesday failed to halt the market’s winning streak.
Headline CPI data came in at 3.7% versus the consensus figure of 3.6%, while September CPI arrived in at 0.4% versus the anticipated 0.3% level and the core inflation M/M rate was 0.3% which was in line with the expected reading.
The 10-year Treasury yield (US10Y) advanced 4 basis point to 4.60%. The 2-year yield (US2Y) was up 8 basis point to 5.06%.
See how yields are trading across the curve.
“10yr US bonds go into the big (CPI) release some -31.5bps beneath their intraday peak last Friday immediately after the jobs report, with yesterday seeing a further -9.5bps move lower,” Deutsche Bank said. “The big story was a significant flattening in the Treasury curve, with the 2yr yield up +1.3bps , whilst the 30yr yield came down -13.8bps, its largest daily decline since March at the height of the banking turmoil.”
“Overall, there was lots of talk about steepeners being a crowded trade and helping to create the fairly sudden flattening of late. We have a 30yr auction today to test this recent long-end outperformance.”
Aside from CPI data, weekly jobless claims hit at the same time. Data showed that claims held steady at 209K which was unchanged from the previous week.
“US Core inflation came in line while headline measures were higher than consensus forecasts,” Mohamed El-Erian stated. “Together with relatively low weekly jobless claims of 209,000, the immediate market impact will be some upward pressures on market yields. Analytically, it is a reminder of the challenges of the ‘final mile’ of battling inflation, especially when core service inflation remains high and there is concern about the spillover into core CPI from higher energy prices.”