OPENING CALL
Stock futures nudged down and benchmark 10-year Treasury notes held broadly steady ahead of the consumer price-index data due at 8:30 a.m. ET which will give investors-as well as Federal Reserve policymakers-their latest read on inflation.
It's expected to show that price pressures continue to ease, potentially raising expectations that the Fed will cut interest rates in September.
Jerome Powell laid the groundwork for rate cuts in his congressional testimony this week, saying that a cooling labor market means a potential source of inflationary pressure has diminished.
Pepsico and Delta Air Lines are due to report ahead of the market open.
Overseas Markets
Global stocks were largely buoyant. The Stoxx Europe 600 rose, as did Japan's Nikkei 225. Hong Kong's Hang Seng Index climbed 2%, while mainland Chinese stocks also rallied.
Postmarket Movers:
Shares of Actelis Networks rose 34% after the company said it received a $260,000 order to modernize the traffic systems of a U.S. Mid-Atlantic county.
E2open Parent reported wider-than-expected losses in its fiscal first quarter. Shares fell 11%.
WD-40 logged higher-than-expected earnings and revenue in the third quarter. Shares climbed 12%
Premarket Movers:
Costco said it was raising its annual membership fees for the first time since 2017. Shares rose almost 3%.
Citigroup stock slipped. On Wednesday, regulators said the bank agreed to pay around $135.6 million for failing to improve its risk-management systems.
Tesla stock edged down after it rose for an 11th consecutive day Wednesday, its longest winning streak since June 2023.
Watch For:
CPI for June; weekly jobless claims; speech by Fed's Alberto Musalem
Today's Headlines/Must Reads:
-The Risky-Loan Trade Is Back
-Republicans Are Fracturing on the Economy
-Companies Sharply Criticize Draft U.S. Cyber Reporting Rules
MARKET WRAPS
Forex:
The dollar's recent price action suggests the inflation data later could materially move the currency, MUFG Bank said.
"A reading of 0.2% month-on-month or 0.3% for core inflation should keep the Federal Reserve on track to begin lowering rates at the September meeting."
A quiet eurozone calendar and a lack of major developments in France since its elections mean the euro will be driven by U.S. events, including inflation data at 1230 GMT, ING said. If the data is slightly lower than expected, the dollar could soften, potentially lifting the euro to $1.0900, it added.
Bonds:
The 10-year Treasury yield is back in the 4.25%-4.30% area, but it could dip lower following the CPI data, ING said.
The economic environment is shaping up for bond-friendly outcomes, and on that assumption, Treasurys can continue to perform, implying lower yields.
Energy:
Oil prices rose after the latest data showed a fall in U.S. inventories and as OPEC revised its global economic growth estimates slightly higher, Swissquote Bank said. A soft reading in the consumer-price index inflation data could back a further rebound in oil prices.
Metals:
Gold futures rose, holding their recent gains ahead of the inflation data. A softer reading set to propel it even higher.
Copper fell amid higher stockpiles. Copper inventories increased to their highest level since 2021, ING said.
Lithium prices are unlikely to have reached a nadir, according to Goldman Sachs.
"We see further lithium raw material supply rationing continuing to be needed to reduce both the 2024 [estimated] surplus and larger surplus [estimated] in 2025."
The seaborne coking coal market has a history of disruptions that should perhaps start to be factored into prices, Commonwealth Bank of Australia said.
"There is a credible argument that a supply-disruption premium should be introduced in coking coal markets given the consistent underperformance of seaborne coking coal supply."
TODAY'S TOP HEADLINES
EU Accepts Apple Offer to Open Mobile Payments to Third Parties
The European Union said Apple's decision to let third-party mobile wallet and payment services use the technology behind its Apple Pay app fully addresses concerns from officials that the iPhone maker was stifling competition.
The European Commission, the EU's executive arm, said it had made a series of commitments offered by Apple legally binding under the bloc's antitrust rules, meaning that Apple now has to comply with what it has offered.
Bankrupt Incora Ordered to Unwind 2022 Deal With Silver Point, Pimco
A bankruptcy judge ordered airplane parts supplier Incora to unwind a 2022 financing deal, a defeat for Pimco, Silver Point and other investment firms that used it to leapfrog other creditors.
Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston ruled on Wednesday in favor of bondholders who were excluded from the debt deal, restoring their first-priority liens over the Platinum Equity-owned aerospace company.
Wall Street's 'Fear Gauge' Is Super Zen Right Now. What That Means for Stocks.
Wall Street's so-called fear gauge seems to be lacking the fear part lately.
The Cboe Volatility Index, more commonly known as the VIX, measures implied volatility in the stock market for the next 30 days. It goes up when Wall Street becomes anxious, and the S&P 500 and other market benchmarks typically fall in response. And there are plenty of reasons for investors to feel uncertain right now: coming U.S. presidential elections, geopolitical tensions across the globe, central banks trying to navigate soft landings in their economies, you name it.
IEA Cuts 2025 Oil Demand Forecast, Lifts Supply View
The International Energy Agency trimmed its forecast for oil-demand growth next year and raised supply estimates, a scenario that would likely leave the market in surplus, reinforcing its expectations of a major glut this decade.
The Paris-based organization cut its projections for next year's oil-demand growth to 980,000 barrels a day from 1 million barrels a day previously, saying it now sees total demand at an average of 104 million barrels a day.
A Bond Rally Is Coming. This Time, Main Street Is Ready.
Suddenly, the bond rally that failed to arrive in 2024 doesn't seem so far off. And for once Main Street investors, who have been pouring money into bond funds, seem poised to capitalize on it.
This year was supposed to be a big one for bond investors. After several years of inflation-fighting rate hikes, Wall Street expected the Federal Reserve to start rapidly lowering the federal-funds rate, giving bonds a lift. Bond prices rise when interest rates fall.
Silicon Valley Wins Few Government Contracts
The federal government has spent $22 billion in recent years on technology from the top 100 national-security startups, a paltry portion of overall contract spending and less than half of what venture capitalists have invested in those same companies.
The gap underscores the discrepancy between the surge of venture capital funding for defense technology and the U.S. government's spending on substantial contracts to startups. The new numbers come from a report released Thursday by Silicon Valley Defense Group, a nonprofit that started a decade ago with the aim of bringing more startup innovation to the Defense Department.
Sen. Peter Welch Says Biden Should Exit Race
WASHINGTON-President Biden's wall of support for his re-election bid began to crumble Wednesday, as a Democratic senator called for him to exit from the race, a party heavyweight indicated his candidacy remains an open question and a megawatt Hollywood donor said he can't win.
Late Wednesday, Sen. Peter Welch of Vermont said Biden should withdraw "for the good of the country," becoming the first Democratic senator to make such a call, and pointed to Vice President Kamala Harris as a capable successor. Writing in the Washington Post, Welch said his constituents "are worried that [Biden] can't win this time, and they're terrified of another Trump presidency."
Write to clare.kinloch@wsj.com TODAY IN CANADA
Earnings:
Aritzia 1Q
MTY Food Group 2Q
OrganiGram Holdings 3Q
Trilogy Metals 2Q
Economic Indicators (ET):
Nothing major scheduled
Stocks to Watch:
Goodfellow 2Q EPS C$0.62; Sales C$140.3M
Waterous Energy-Backed Strathcona Maps Carbon-Capture Projects
Strathcona Resources is partnering with the Canada Growth Fund to pump as much as $1.47 billion into greenhouse gas-mitigating carbon-capture projects that seek to capture and store up to 2 million metric tons of carbon dioxide annually.
The Canada Growth Fund, a public-investment vehicle, pledged C$500 million and can increase its commitment to C$1 billion over time, the same total that Strathcona agreed to invest.
Expected Major Events for Thursday
06:00/GER: Jun CPI
06:00/UK: May Index of production
06:00/UK: May UK trade
06:00/UK: May Index of services
06:00/UK: May Monthly GDP estimates
08:00/FRA: Jul IEA Oil Market Report
08:30/UK: 2Q Bank of England Credit Conditions Survey
08:30/UK: 2Q Bank of England's Bank Liabilities Survey
11:30/UK: Jun NIESR Monthly GDP Tracker
12:30/US: Jun CPI
12:30/US: Jun Real Earnings
12:30/US: 07/06 Unemployment Insurance Weekly Claims Report - Initial Claims
12:30/US: U.S. Weekly Export Sales
13:00/RUS: Weekly International Reserves
14:30/US: 07/05 EIA Weekly Natural Gas Storage Report
16:00/US: Jun Monthly U.S. Retail Chain Store Sales Index
18:00/US: Jun Monthly Treasury Statement of Receipts and Outlays of the U.S. Government
20:30/US: Federal Discount Window Borrowings
20:30/US: Foreign Central Bank Holdings
Expected Major Events for Friday
04:30/JPN: May Revised Industrial Production
06:00/GER: Jun WPI
06:45/FRA: Jun CPI
12:30/CAN: May Building permits
12:30/US: Jun PPI
14:00/US: Jul University of Michigan Survey of Consumers - preliminary
16:00/US: World Agricultural Supply & Demand Estimates (WASDE)
16:59/GER: May Balance of Payments
(MORE TO FOLLOW) Dow Jones Newswires
07-11-24 0632ET
