US Markets Tread Water Ahead of Data – Nasdaq Down 0.3%
US markets experienced a mixed session yesterday as investors looked ahead to tonight’s key inflation data. The three major stock indices all closed relatively flat, with the Dow up 0.28%, the S&P edging just 0.03% higher, and the Nasdaq declining by 0.36%. The usual correlation between US Treasury yields and the dollar failed to materialise, with the dollar falling on the day—the DXY down 0.37%—while yields pushed higher, with the 2-year yield up 0.90 basis points to 4.283% and the 10-year yield rising 3.9 basis points to 4.535%.
Oil prices moved higher within recent ranges as sanctions influenced supply concerns, weighing on sentiment. Brent rose 1.29% to $76.85, while WTI climbed 1.16% to $73.16. Meanwhile, gold took a breather after its recent meteoric rise, with some profit-taking flows emerging ahead of the US data, finishing down just 0.1% on the day at $2,896.62.
Markets Focus on Data and Central Banks
There appears to have been a notable shift in market reactions to geopolitical updates this week, perhaps indicating a change in investor focus across financial products. In recent weeks, we have seen significant spikes in asset prices following updates from President Trump and the new administration, particularly regarding tariffs. However, the market impact of such developments seems to have diminished markedly this week. This suggests an adjustment to the new ‘norm’—while traders will still react strongly to confirmed policy updates, they now seem to be prioritising underlying fundamentals.
As a result, market focus has returned to economic data, with tonight’s key CPI release likely to be a major catalyst for price movements.
Traders Focus on US Session in the Day Ahead
Traders expect relatively quiet and range-bound conditions during the first two sessions of the day, with little scheduled on the event calendar ahead of the main data release once New York opens. The US CPI numbers are undoubtedly the highlight of the day, with expectations of a 0.3% month-on-month increase for both CPI and Core CPI, and a 2.9% year-on-year rise. Any deviation from these forecasts is likely to trigger significant market moves, particularly in anticipation of future Fed interest rate decisions.
Jerome Powell will also deliver the second day of his semi-annual testimony to Congress today, though he is expected to maintain his recent stance. Later in the day, oil traders will be closely watching the latest US inventory data for further market cues.
