Stock futures were little changed on Sunday evening as investors brace for fresh inflation data and political turmoil overseas that could ripple through the bond market.
That comes as Friday’s dismal jobs report ratcheted up recession fears while also locking in odds for a rate cut later this month from the Federal Reserve.
Futures tied to the Dow Jones Industrial Average rose 11 points, or 0.02%. S&P 500 futures were up 0.02%, and Nasdaq futures added 0.10%.
The yield on the 10-year Treasury ticked 1 basis point lower to 4.076%. The U.S. dollar was up 0.11% against the euro and up 0.70% against the yen after Japan’s prime minister announced he will step down after less than a year in office.
More political turmoil in the world fourth-largest economy could rattle the bond market as investors gauge whether the next leader will lean toward fiscal discipline or more profligacy.
Similarly, France’s government faces a confidence vote on Monday after bond vigilantes sent French yields higher on expectations for more gridlock and no progress on reining in deficits.
U.S. oil prices rose 0.23% to $62.01 per barrel, and Brent crude added 0.23% to $65.63. That’s despite key OPEC+ members agreeing on another production hike meant to grab more market share.
Gold fell 0.55% to $3,633 per ounce, but still hovering near record highs after recession fears sent safe-haven assets higher last week.
More recession signals were lurking in the latest jobs data. On Sunday, Moody’s Analytics chief economist Mark Zandi point out that most U.S. industries have been shedding jobs rather than adding them for several months, warning that “this only happens when the economy is in recession.”
Such labor market weakness basically guaranteed a Fed rate cut. According to CME’s FedWatch tool, Wall Street is certain that some kind of cut is coming when the central bank announces its policy decision on Sept. 17. The only question is whether it will be 25 basis points or 50 basis points. Right now, a 92% probability of a quarter-point cut is priced in.
Perhaps the only thing that could put a rate cut in doubt is a surprise spike in inflation. The effect of President Donald Trump’s tariffs on inflation has been more muted that anticipated, but investors will get crucial updates.
On Wednesday, the producer price index for August will come out, and economists expect a 0.3% month increase, cooling from the 0.9% surge in July.
On Thursday, the consumer price index is due, and Wall Street sees a 0.3% gain, accelerating from the 0.2% pace a month earlier. On an annual basis, the CPI is also seen heating up, with August expected to see a yearly pace of 2.9%, up from 2.7% in July.
But inflation in core consumer prices should remain steady at a monthly rate of 0.3% and an annual rate of 3.1%. Still, both the headline CPI and core CPI would continue to be above the Fed’s 2% target.
Meanwhile, Fed Governor Lisa Cook is fighting Trump’s attempt to fire her, and a judge hearing the case could issue a ruling in the coming week, clarifying whether she will be able to participate in the FOMC meeting.
In addition, the Senate could vote on Trump’s nomination of White House economic adviser Stephen Miran to the Fed’s board of governors, allowing him to take part in the meeting.
