US futures retreat ahead of data-heavy week

investmentnews.com:

US equity futures started off a data-heavy week on the backfoot before a key report on US inflation that will test the resolve of a bull market riding on bets that Federal Reserve Chair Jerome Powell and his colleagues are moving closer to a pivot to easier policy.

Futures on the S&P 500 slipped 0.2% while those on the rate-sensitive and tech-heavy Nasdaq 100 were steady. The 10-year Treasury yield was flat.

Tuesday’s US Consumer Price Index report is a key piece of the puzzle toward completing the backdrop for the Fed to start cutting rates in the middle of the year. Comments from policy makers last week appeared very dovish, and swaps traders see a June rate cut as a virtual lock, even with another set of strong payroll data on Friday. 

A stronger-than-anticipated jump in consumer prices could derail rallies in stocks and bonds fueled by confidence that the Fed is on the verge of pulling inflation back to its target. That was the case last month, when the CPI data triggered a market selloff. The impact may be stronger this time because it’s the last major piece of economic data before the Fed’s March 20 meeting.

“The bottom line is that loads of folk are preoccupied trying to predict or front-run a first Fed rate cut,” said Mark Dowding, the CIO at RBC BlueBay Asset Management. “I still see this as some months away.”

In currencies, the Japanese yen extended its meteoric rise on expectations the Bank of Japan is about to start lifting interest rates. Bitcoin topped $71,000 for the first time, advancing for a sixth straight day and taking this year’s rally to almost 70% on the back of massive inflows into US exchange-traded funds. Meanwhile, a gauge of the dollar is on track for a seventh day of losses, its longest