The S&P 500 futures are down 30 points and are trading 0.7% below fair value, the Nasdaq 100 futures are down 143 points and are trading 0.9% below fair value, and the Dow Jones Industrial Average futures are down 189 points and are trading 0.5% below fair value.
Equity futures indicate a lower open amid rising market rates. The 2-yr note yield, which is most sensitive to changes in the fed funds rate, is up 12 basis points from yesterday at 4.34%. The 10-yr yield is up four basis point from yesterday at 4.11%.
Enthusiasm about possible near-term rate cuts has been tempered further by European Central Bank President Lagarde, who echoed recent comments by other central bankers, saying rate cuts are likely to begin this summer, according to FT.
Yields were already heading higher in front of the 8:30 ET data release, but selling increased in response.
Total retail sales increased 0.6% month-over-month in December (Briefing.com consensus 0.4%) after an unrevised 0.3% increase in November. Retail sales, excluding autos, increased 0.4% month-over-month after increasing an unrevised 0.2% in November. Excluding autos and gasoline station sales, retail sales rose 0.7% month-over-month.
The key takeaway from the report is that consumer spending remained healthy in the final month of 2023, which does not strengthen the argument for an imminent start to a rapid rate cut campaign by the FOMC.
Export prices declined 0.9% in December following a 0.9% decline in November. Export prices, excluding agriculture, declined 0.9% in December following a 1.0% decline in November.
Import prices were unchanged in December following a revised 0.5% decline in November (from -0.4%). Import prices, excluding oil, were unchanged in December following a revised 0.1% increase in November (from 0.2%).
Earlier, the MBA Mortgage Applications Index increased 10.4% with purchase applications jumping 9% and refinance applications climbing 11%.
Participants will receive the December Industrial Production and Capacity Utilization report at 9:15 ET, followed by the November Business Inventories and January NAHB Housing Market Index at 10:00 ET.
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Originally Posted January 17, 2024 – Moderating near-term rate cut expectations pressure market
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