Futures inch higher with all eyes on inflation data
By Shristi Achar A and Johann M Cherian
(Reuters) -U.S. stock index futures edged higher on Tuesday as investors awaited a crucial inflation reading later in the day for cues on the monetary policy trajectory, ahead of the Federal Reserve's interest rate decision later in the week.
Equities have advanced in recent weeks, with the three main stock indexes also clocking their highest close for the year on Monday, buoyed by expectations that the U.S. central bank is done hiking rates and could potentially ease monetary policy next year.
Market participants will keenly watch consumer price index (CPI) data for November, due at 8:30 a.m. ET. The report is expected to show headline inflation remained unchanged month-on-month, with core CPI expected to advance 0.3%, according to economists polled by Reuters.
The data is set to come in on the heels of the Fed's monetary policy meeting during the day, with a decision on interest rates at the end of the meeting on Wednesday.
Money markets have almost fully priced in a rate-hike pause at the end of the Fed meeting, with traders seeing a 47.5% chance of a cut as soon as March 2024, and a 79.9% chance of a cut in May, according to CME Group's (NASDAQ:CME) FedWatch tool.
«Under normal circumstances, further slowdown in inflation could have tempted some participants to bring forth their cut bets again,» Charalampos Pissouros, senior investment analyst at XM, said.
«But with the core rate holding at double the Fed's objective and the committee announcing its policy decision on Wednesday, they may avoid bold changes.»
The European Central Bank and the Bank of England are also scheduled to deliver their policy verdicts later this week.
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