US Futures Decline as Countdown to Inflation Starts – Europe Market Wrap

US equities futures began a data-heavy week on the back foot, ahead of a major report on US inflation that will test the fortitude of a bull market riding on predictions that Fed’s Powell and his colleagues are getting closer to a shift towards softer policy.

Tuesday’s US Consumer Price Index report is an important piece of the puzzle in completing the backdrop for the Fed to begin decreasing interest rates in the middle of the year. Policymakers’ comments last week seemed quite dovish, and swaps traders regard a June rate cut as a virtual certainty, especially after another batch of solid payroll numbers on Friday.

Futures on the S&P 500 fell 0.2%, while those on the rate-sensitive and tech-heavy Nasdaq 100 remained unchanged. The 10-Yr Treasury yield remained unchanged.

In currencies, the Japanese yen continued its spectacular rise on hopes that the Bank of Japan will begin raising interest rates.

For the first time, Bitcoin broke beyond $71,000, rising for a sixth day in a row and bringing this year’s rally to about 70% thanks to significant inflows into US exchange-traded funds. A measure of the dollar, meanwhile, is headed for its longest losing run in over four years—a seventh day of losses.

ECB’s Kazimir: The ECB should wait until June with their first rate cut; rushing a move is not smart or beneficial.

UBS expects the Bank of England to start cutting rates in August vs May expected earlier.