*
U.S. equity index futures gyrate, now mixed, little
changed
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U.S. Jan CPI MM, core MM in-line with ests; YY, core YY > ests
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Euro STOXX 600 index up ~0.4%
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Dollar, crude decline; gold, bitcoin rise
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U.S. 10-Year Treasury yield dips to ~3.69%
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U.S. STOCK FUTURES GYRATE WITH CPI DATA (0900 EST/1400 GMT)
U.S. equity index futures are around flat in the wake of the
release of the latest data on inflation.
The January consumer price index (CPI) month-over-month
headline number and on a core basis were both in-line with
estimates. The year-over-year headline and core readings were
both slightly above estimates:
The data has increased the market's perception that the Fed
delivers another modest interest rate increase at its March
21-22 FOMC meeting. According to the CME's FedWatch Tool, the
probability of a 25 basis point rate hike has now risen to 94%
from 85% just prior to the numbers being released. There is now
a 6% chance that the Fed raises rates 50 basis points at its
next meeting vs 15% just before the data came out.
E-mini S&P 500 futures are around flat. That's vs a
gain of around 0.4% from just before the numbers were released.
A majority of S&P 500 sector SPDR ETFs are quoted higher in
premarket trade although gains are slight. Materials are
posting the biggest rise, up about 1%. Just industrials and consumer discretionary are slipping.
Regarding the inflation data, Hugh Johnson, chief economist
at Hugh Johnson Economics, said, "You have a little bit of a
negative reaction because these numbers are not going to take
the pressure off the Federal Reserve."
Johnson added, "I think the more important question though
is what will the Federal Reserve do with regard to the terminal
rate when they meet in March, and right now the expectation is
starting to grow that they're going to increase the terminal
rate from 5 to 5 1/2."
"So, if you're looking for some indication that the Federal
Reserve is going to pause, take its foot off the brake, you're
not going to see it in these numbers."
Here is a snapshot of where markets stood around 25 minutes
after the data came out:
(Terence Gabriel, Shashwat Chauhan)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
