Here are five things you must know for Tuesday, April 12:
1. — Stock Futures Edge Lower, Treasury Yields Rise Ahead of March CPI Data
U.S. equity futures traded mixed Tuesday, while the dollar breached a fresh two-year high against its global peers and Treasury bond yields extended their recent surge, as investors braced for what could be a market-shaking reading of inflation in the world’s biggest economy.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.25% higher in overnight trading at 100.185, the highest in more than two years, as traders re-set currency levels ahead of the Federal Reserve’s signaling on higher interest rates.
Benchmark 10-year notes followed suit, rising to 2.817% in European dealing, the highest since 2018, pulling 10-year German bund yields — which traded with a negative yield late last year — to a 2015 high of 0.88%.
Inflation pressures, which are likely to have surged to the highest levels since 1981 last month, have dictated trading on Wall Street for much of the past week, hammering tech and growth stocks and pulling the broadest measure of global stocks, the MSCI World Index, to the lowest level in a month.
Little relief appears in sight: the CME Group’s FedWatch tool pegs an 85.4% chance of a 50 basis point rate hike from the Fed in May, followed by a 54.1% chance of a follow-on move in May and 48.9% chance of a third 50 basis point hike in July.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average indicating a modest 20 point opening bell decline while those linked the S&P 500, which is down 7.4% for the year, are priced for a 2 point gain. Futures linked to the tech-focused Nasdaq are looking at a modest 32 point opening bell bump.
2. — White House Braced for ‘Extraordinarily Elevated’ March Inflation Reading
Americans should be ready for an “extraordinarily elevated” level of inflation from last month’s reading, the White House cautioned late Monday, thanks in part to the impact on food and energy prices from Russia’s war on Ukraine.
U.S. crude futures…