LIVE MARKETS-US stock futures higher, yields lower, despite hot PPI

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U.S. STOCK FUTURES HIGHER, YIELDS LOWER, DESPITE HOT PPI

The main U.S. equity index futures are higher after the release of the latest data on U.S. producer prices and jobless claims. E-mini S&P 500 futures EScv1 are now up around 0.2% vs a loss of around 0.1% just before the numbers came out.

January PPI month-over-month and year-over-year came in hotter than expected. ExFood/Energy on a month-over-month basis was in-line with the expectation. ExFood/Energy on a year-over-year basis was above the estimate.

Of note, the prior month's readings were all revised higher. With this, although the January numbers were largely above estimates, they were also mostly below the prior month's revised readings.

There were slightly fewer initial jobless claims than expected:

According to the CME's FedWatch Tool, the probability that the Fed sits on its hands and leaves its current target rate of 4.25%-4.50% at its March 18-19 FOMC meeting is unchanged at around 98% vs just before the data. The chance that the FOMC cuts rates by 25 basis points is around 2%.

Looking out further into 2025, the market is now showing a slight bias for one Fed 25 basis point rate cut to occur in September.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.57%. It was around 4.60% just before the numbers came out. The yield ended Wednesday at 4.637%.

A majority of S&P 500 index .SPX sector SPDR ETFs are quoted up ahead of the opening bell. Consumer discretionary XLY.P, up about 0.7%, is posting the biggest gain. Healthcare XLV.P and energy XLE.P are ticking down just slightly.

The SPDR S&P regional banking ETF KRE.P is up around 0.6%.

Regarding the data, Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute in St. Louis, MO, said:

"The market reaction to PPI today was subdued we think because the annual revisions came out and the revised figure for December matched that of January."

Christopher added "we had already realized that producer prices at the goods level is no longer contributing significantly to overall disinflation to consumer prices. This is just a confirmation of yesterday's number which the market had already priced in."

Here is a premarket snapshot from around 0853 EST:

(Terence Gabriel, Sinéad Carew)

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