Stock futures held broadly steady on Tuesday in cautious trading ahead of inflation data that may impact the debate at this week’s Federal Reserve policy meeting.
The central bank is widely expected to leave borrowing costs unchanged at a range of 5.25% to 5.50% at the conclusion of its two-day meeting on Wednesday.
The European Central Bank and the Bank of England are also expected to stand pat on interest rates following their meetings on Thursday.
“Investors are in a holding pattern ahead of a slew of economic data and interest rate decisions and that’s kept market activity pretty subdued,” AJ Bell said.
“Although no one expects any surprises from central bankers in terms of their decision, it will be their tone and choice of words with the power to send any anticipated Santa rally hurtling in the other direction,” AJ Bell added.
Traders also will be keeping an eye on a $21 billion auction of 30-year bonds by the Treasury. Last month’s 30-year auction was not well-received and sparked a spike in yields and volatility in stocks.
“Treasury yields look to be starting to turn back higher, and I suspect the CPI report might prove to be the catalyst for TNX [the CBOE 10 Year Treasury Note Yield Index index] getting back over 4.30%,” Fundstrat said.
“This would likely prevent stocks from making too much further headway given recent correlation trends. However, yields have indeed risen over the last few trading days and stocks thus far have not been affected.”