Futures, Yields, Dollar All Jump Ahead Of Key CPI Report

Futures, Yields, Dollar All Jump Ahead Of Key CPI Report

US equity futures are higher into today's CPI print with tech outperforming, as the rout that gripped markets in the past two weeks receded after Trump downplayed the risk of a tariff-led recession. An acceleration of the Trade War is not impacting global Equities. As of 8:00am ET, S&P futures are up 0.9%, at session highs while Nasdaq futures rise 1.1%, with all Mag7 higher pre market (ex-AAPL, same pattern as yesterday). Bond yields are also higher by 1bp as German 10Y rates hit the highest since 2023; the USD is also rising as the euro and yen slide. Commodities are stronger led by Energy and Metals with Ags under pressure. The macro data focus is on CPI where the whisper number appears to be below the BBG consensus (0.3% MoM for core/headline; 3.2%/2.9% YoY for core/headline) but the print is important to shape the market narrative with a hotter print producing stagflation worries while propping up the USD, and a cooler print likely to assuage recent econ concerns.

In premarket trading, Nvidia, Palantir and Tesla were roughly 3% higher with most Mag7 names rebounding (Alphabet +0.9%, Amazon +0.8%, Apple -0.06%, Microsoft +0.6%, Meta +1.2%, Nvidia +2% and Tesla +3.4%). Intel surged 8% after Reuters reported that TSMC has pitched Nvidia, Advanced Micro Devices and Broadcom about taking stakes in a joint venture that would operate the chipmaker’s factories. Here are some other notable premarket movers:

• EW Scripps rises 21% after the TV broadcasting company announced a deal to refinance its debt. The company also reported fourth-quarter revenue that beat expectations.
• Groupon jumps 20% after the online coupon company gave a revenue forecast for 2025 that beat the average analyst estimate.
• IRobot falls 21% after the robot vacuum company reported 4Q revenue that missed the average analyst estimate. The board has initiated a review of strategic slternatives.
• LoanDepot slips 12% after the lender reported revenue for the fourth quarter that missed the average analyst estimate.
• Myriad Genetics climbs 4% after the genetic testing company is upgraded to overweight at Piper Sandler on potential for a change in strategic direction.
• Stitch Fix rallies 18% after the personal styling platform boosted its full year revenue forecast.
• Rocket Pharmaceuticals rises 3% after BMO Capital Markets initiated coverage at outperform and set a price target more than six times above where the shares last closed, citing the likely life-long effect of the company’s gene therapies.

Some investors pointed to sentiment improving after President Donald Trump said he doesn’t see a US economic recession, as well as Ukraine’s decision to accept a US proposal for a 30-day truce with Russia. At the White House late Tuesday, Trump struck a more upbeat note when asked if he was worried about a downturn. “I don’t see it at all. I think this country’s going to boom,” he said. And he played down the markets slump, too. They’re “going to go up and they’re going to go down,” Trump said. “Doesn’t concern me.”

Meanwhile, US tariffs on steel and aluminum imports came into force Wednesday, extending the trade wars to more of the country’s top trading partners. The European Union launched countermeasures, with plans to impose its own duties on up to €26 billion ($28.3 billion) worth of American goods.

Besides the trade war, all eyes are also on the US CPI report, with economists polled by Bloomberg expecting an increase of 0.3% in February, versus the previous month’s 0.5% rise (our full preview is here). While the Federal Reserve is not expected to cut interest rates at next week’s policy meeting, a softer print should reassure investors who have been on edge over the inflation trajectory, particularly in light of brewing trade wars.

“Things are generally looking a little bit better on the inflation front in the United States and if today’s number is benign it will be good to see,” said Guy Miller, chief market strategist at Zurich Insurance Co.

Meanwhile, Goldman Sachs lowered its target for the S&P 500 Index to 6,200 from 6,500, in view of declines in the “Magnificent 7” stocks. That still sees the market rising 11% versus Tuesday’s close. “Our revised estimates reflect the recently reduced GDP growth forecast of our US economics team, a higher assumed tariff rate, and higher level of uncertainty that is typically associated with a greater equity risk premium,” strategists including David Kostin and Jenny Ma wrote in a note dated Tuesday.

In Europe, the Stoxx 600 rises 0.8% and is on course to snap a four-day losing streak, led by construction, chemical and industrial shares. The retail sector was the worst performer, trading at the lowest level since August, dragged down by Zara owner Inditex SA, which reported slowing sales. Ukraine’s decision to accept a US proposal for a 30-day truce with Russia has helped underpin broader risk sentiment, as did upbeat remarks from President Donald Trump on US economic prospects. That offset trade concerns as US tariffs on steel and aluminum came into force, prompting countermeasures from the EU. Here are some of the biggest movers on Wednesday:

• Zealand Pharma shares soar as much as 48% in Copenhagen, the most on record, following its pact with Roche to co-develop and co-commercialize the Danish company’s experimental obesity drug petrelintide.
• Cucinelli shares rise as much as 3.9% after the luxury goods stock was initiated with an overweight rating at Morgan Stanley, which cited the resilience of the Italian firm’s business model against a backdrop of macro uncertainty.
• Rheinmetall shares rise as much as 9.3% after the German maker of tanks and armored vehicles forecast sales and operating profit will continue to rise this year, boosted by increased defense spending in Europe. The firm’s operating margin forecast for 2025 missed estimates, however.
• Hill & Smith shares rise as much as 15%, the most in over three years, after the maker of products for the construction and infrastructure markets beat earnings expectations in 2024.
• Hochschild shares rise as much as 17% after the miner reintroduced its first dividend since 2022 as it reported a significant improvement in 2024 earnings, according to analysts at RBC.
• Puma shares drop as much as 27%, the most on record, after the sportswear maker gave a disappointing outlook, citing trade disputes and currency volatility.
• Inditex shares fall as much as 8.9%, the most in three years, after the owner of Zara reported trading in the first quarter-to-date which was softer than analysts expected, offsetting a 4Q EBIT beat.
• Porsche shares fall as much as 5.2% after the luxury carmaker lowered its medium term targets due, according to JPMorgan, to China and higher investments.
• Defense stocks decline after US and Ukrainian negotiators reached an accord for a 30-day halt in the conflict in Ukraine.
• Basic-Fit shares fall as much as 16%, its largest drop since 2022, after the fitness club company reported results and a FY25 outlook that missed expectations.

Earlier in the session, Asian stocks were mixed after a three-day selloff as investors sought to assess the economic impact of US President Donald Trump’s latest tariff moves. The MSCI Asia Pacific Index was little changed after swinging between a gain of 0.4% and a loss of 0.3%. While key gauges in South Korea, Taiwan and Japan advanced, Australia’s mining-heavy stock benchmark fell as the nation failed to secure an exemption from US steel and aluminum tariffs. Malaysia’s benchmark equity index slumped into a technical correction, partly triggered by foreign investors selling the nation’s stocks. Asia’s equity gauge pared an intraday decline after Trump sought to reassure a business roundtable over the outlook for the US economy and the steps he’s taking to boost growth. His comments followed another selloff in US equities on Tuesday. However, selling pressure resurfaced, with Chinese tech stocks falling near the end of the Hong Kong trading session to drag the MSCI Asia gauge lower.

In FX, the Bloomberg Dollar Spot Index rises 0.2%. The yen underperforms its G-10 peers, falling 0.6% against the greenback after the Trump’s administration hit out at Japan’s elevated rice tariffs, raising concern that the country may be next in line for US levies. EUR/USD fell as much as 0.3% to 1.0888, pulling off the five-month peak touched earlier this week. “I think it’s time for some consolidation in the euro’s rally, which has affected the DXY index significantly,” said Alvin Tan, head of Asia foreign-exchange strategy at RBC in Singapore.

In rates, Treasury futures are down in early US session after small Asia-session gains were erased during London morning. US 10-year yields are higher by 2bps at 4.30%; Bunds lead a selloff in European government bonds, with German 10-year yields rising 3 bps to 2.92% the highest since 2023. Downside pressure stems from bund selloff following European Union’s countermeasures against US metals tariffs. Germany’s 10-year yield is getting closer to the 3% milestone as investors brace for a historic surge in spending and borrowing. Focal points of US session focus include February CPI data and 10-year note reopening. This week’s Treasury auction cycle continues with $39 billion 10-year at 1pm New York time and concludes Thursday with $22b 30-year reopening; demand was soft for Tuesday’s 3-year new-issue auction, which tailed by 0.6bp

In commodities, oil prices advance, with WTI rising over 1% to $67 a barrel. Spot gold is steady near $2,915/oz. Bitcoin falls 0.6% to around $82,200.

Today's economic data calendar includes MBA Mortgage Applications (up 11.2%, vs 20.4% last month). February CPI (8:30am) and Federal budget balance (2pm). Fed officials are in external communications blackout ahead of March 19 policy announcement

Market Snapshot

• S&P 500 futures up 0.3% to 5,593.25
• STOXX Europe 600 up 0.5% to 539.74
• MXAP little changed at 185.03
• MXAPJ down 0.1% to 580.17
• Nikkei little changed at 36,819.09
• Topix up 0.9% to 2,694.91
• Hang Seng Index down 0.8% to 23,600.31
• Shanghai Composite down 0.2% to 3,371.92
• Sensex down 0.3% to 73,892.58
• Australia S&P/ASX 200 down 1.3% to 7,786.24
• Kospi up 1.5% to 2,574.82
• German 10Y yield little changed at 2.91%
• Euro little changed at $1.0909
• Brent Futures up 0.6% to $69.99/bbl
• Brent Futures up 0.6% to $69.97/bbl
• Gold spot up 0.1% to $2,918.63
• US Dollar Index up 0.13% to 103.55

Top Overnight News

• Trump posted "The price of eggs have come down, interest rates have come down, gasoline prices have come down—It's all coming down! We're doing it the right way, and I have tremendous confidence in this Country and in the people of this Country…", via Truth Social.
• Trump's administration is considering cutting the size of the Justice Department's public corruption unit.
• The Department of Education said it initiated a reduction in force impacting nearly 50% of the department's workforce with impacted staff to be placed on administrative leave beginning March 21st.
• Commerce Secretary Howard Lutnick said Tuesday that President Trump’s tariff policies will be worth it, even if the economy ends up in a recession. The Hill
• Elon Musk has signalled to President Trump’s advisers in recent days that he wants to put $100mln into groups controlled by the Trump political operation, according to NYT.
• US House passed the spending bill to avert a government shutdown and sent it to the Senate.
• Senior US Democrats believe a government shutdown would be a lose-lose scenario, they are exploring alternative strategies to prevent this perception while avoiding accusations of supporting the President: Punchbowl.
• Active funds continued to sell shares in the MSCI China Index despite its 12% gain last month, a sign of skepticism about the outlook. BBG
• Beijing summoned Walmart execs to express concern after the company reportedly urged Chinese suppliers to absorb higher costs from US tariffs. Such demands, if true, would be bad for its operations in China, state-affiliated media wrote. BBG
• Many of Japan's biggest companies from tech conglomerates to Toyota, have met union demands for substantial wage hikes for a third consecutive year, seeking to help workers cope with inflation and retain staff amid labor shortages. RTRS
• The Kremlin said on Wednesday it needed to be briefed by the United States on the outcome of U.S.-Ukrainian talks in Saudi Arabia before it would comment on whether a proposed ceasefire was acceptable to Russia. RTRS
• Europe retaliates against the US for Trump’s 25% steel/aluminum tariffs, imposing its own duties on American imports worth EU26B (including bourbon and whisky, jeans, and Harley-Davidson bikes), w/additional actions set to arrive next months. FT, WSJ
• The UK split with the EU over retaliatory tariffs even as 25% levies on foreign metals came into effect, reaffirming its commitments to US trade talks. BBG
• TSMC has proposed a deal to AMD, Broadcom, Nvidia, and Qualcomm about a joint venture that would operate Intel’s chip factories (TSMC would run the facilities but own no more than 50%). RTRS

Tariffs/Trade

• US President Trump's 25% tariffs on steel and aluminium took effect with no exemptions.
• US President Trump separately commented that tariffs are having and will have a tremendously positive impact, while he also suggested tariffs may go higher than 25% but did not specify which tariffs.
• Senior EU Official says confirms it is monitoring to see if Chinese steel overcapacity is re-routed to Europe, and "we stand ready to take measures where we need to take those measures", via SCMP's Birmingham. "We may indeed have to take further measures to deal with this indirect consequence of the US tariffs."
• Canada's Energy Minister said at CERAWeek that Canada may implement non-tariff measures such as restricting oil exports if the trade war with the US escalates and that ethanol is absolutely on the list of potential retaliatory tariffs being considered. Canada's Energy Minister also said Canada will respond shortly if tariffs come into play and will wait and see on tariffs, as well as noted that Canada does not want to provoke or escalate and seeks a positive outcome.
• EU Commission launched countermeasures on US imports in which it will allow the suspension of existing 2018 and 2020 countermeasures against the US to lapse on April 1st, while it is putting forward a package of new countermeasures on US exports. Furthermore, it stated that EU countermeasures could apply to US goods exports worth up to EUR 26bln to match the economic scope of the US tariffs but added the EU remains ready to work with the US administration to find a negotiated solution.
• French European Affairs Minister Haddad says, on EU's response to Trump tariffs, "we can go further"; reaffirms trade war is in no one's interest. Thereafter, EU Commission President von der Leyen says countermeasures will match the scope of US tariffs and will be entirely in place by April 13th.
• UK Business and Trade Secretary Reynolds said it is disappointing the US has imposed global tariffs on steel and aluminium, while he stated that negotiations are ongoing for a wider economic agreement with the US to eliminate additional tariffs.
• Australian PM Albanese reiterated they will not impose reciprocal tariffs on the US and will continue to engage with the US on tariffs.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed following the choppy performance stateside where the focus was centred on tariff rhetoric and Ukraine ceasefire talks, while the US's 25% tariffs on steel and aluminium took effect overnight. ASX 200 underperformed with firm losses in consumer discretionary, industrials and financials, while risk sentiment was also pressured after Australia failed in its efforts to get an exemption from looming tariffs. Nikkei 225 remained afloat but with price action choppy after mixed PPI and BSI Manufacturing data. Hang Seng and Shanghai Comp were ultimately mixed with the mood indecisive in both the mainland and Hong Kong amid light fresh catalysts although China’s securities regulator recently pledged to consolidate the momentum of market stabilisation.

Top Asian News

• BoJ Governor Ueda says very worried about uncertainty regarding overseas economy and prices; underlying inflation still remains below 2%; Ready to conduct bond buying operation nimbly in exceptional cases, when long-term rates make irregular moves.
• Hitachi (6501 JT), Toyota (7203 JT) and NEC (6701 JT) agreed to fully meet unions' wage hike demands for 2025, while Nissan (7201 JT), Mitsubishi Electric (6503 JT), Honda (7267 JT), Nippon Steel (5401 JT) and Panasonic (6752 JT) agreed to average monthly wage increases below unions' demands.
• Global Times tweets "China’s Ministry of Commerce and other departments summoned Walmart on Tuesday for reportedly requiring some of its Chinese suppliers to slash prices significantly in an attempt to shift the burden of the US tariffs on China".
• Bank of Japan officials see several reasons against intervening in the bond market even after benchmark yields hit the highest level since 2008, Bloomberg sources say

European bourses (STOXX 600 +0.8%) are stronger today, and sentiment in the complex improves following the hefty downside seen on Tuesday and as the region reacts to Ukraine ceasefire optimism. European sectors hold a strong positive bias; Construction & Materials tops the pile, whilst Retail is the clear laggard. The latter is pressured by post-earning losses in Inditex (-8.2%, slow start to Q1) and Puma (-24%, very weak 2025 outlook). In terms of key movers today; Zealand Pharma (+25%) opened higher by 45% after it secured a deal with Roche (+3%) to collaborate on obesity drugs; Novo Nordisk (-5%).

Top European News

• Portugal's Parliament rejected the motion of confidence in the cen

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