The market continues to wait on US inflation data later today
S&P 500 futures and Dow futures are now up 0.2% after having been relatively flat throughout the session with Nasdaq futures erasing losses of around 0.2% to keep near flat levels just above positive territory for now.
Higher Treasury yields are still something to look out for with 10-year yields keeping an advance on the day at around 1.69%.
Despite all the focus on the inflation data later, will it really change anything?
Barring a surprise miss, which shouldn't be the case due to base effect adjustments, a more upbeat reading mainly reaffirms the market's train of thought over the past three months with regards to how things are going to start developing.
It is still too early to judge any sustainable price pressures. It is still too early for the Fed to shift its policy thinking. Hence, it isn't going to end this inflation debate.
Considering how non-farm payrolls and the stellar ISM services report last week wasn't enough to lift 10-year yields beyond 1.75%, it could prove a tall order for this report (with high expectations already) to push the boundaries of the bond market.
That said, it also wouldn't be the most surprising thing as the market may just look for any catalyst to keep with the narrative in the bigger picture of things.
As much as the macro picture is still intact, I'm leaning towards the former but we may see 10-year yields jump up again this week to test 1.75% before all is said and done.
