U.S. stock futures edged lower on Friday as investors awaited the release of the Federal Reserve’s key inflation gauge. European inflation data is also due, while the Trump administration has ended the “de minimis” exemption on low-value imports.
Focus on U.S. Inflation
All eyes are on the U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation. Analysts expect core PCE to remain at 0.3% month-on-month, keeping the annual rate at 2.9%.
Markets are wary that tariffs imposed by President Donald Trump may be pushing up consumer prices, following recent surprises in producer inflation. The Fed cut rates by a full percentage point last year but has kept policy steady this year amid concerns that higher tariffs could reignite inflation above its 2% target.
Many expect a 25-basis-point cut in September, though subsequent moves remain uncertain. Fed Governor Christopher Waller said on Thursday he wants to start cutting rates next month and “fully expects” more rate cuts to follow to bring the Fed’s policy rate closer to a neutral setting. Waller and Fed Governor Michelle Bowman both dissented from the July decision to hold short-term rates steady. Both, appointed by Trump, are under consideration as potential successors to Fed Chair Jerome Powell amid concerns of central bank politicisation.
Earlier this week, Trump announced he was firing Fed Governor Lisa Cook over alleged mortgage fraud, which Cook says is illegal; she is suing to block the removal.
U.S. Futures Slide
Futures fell modestly but remain poised for solid monthly gains. At 03:20 ET, S&P 500 futures were down 5 points (0.1%), Nasdaq 100 futures dropped 35 points (0.1%), and Dow futures fell 80 points (0.2%). On Thursday, the S&P 500 closed 0.3% higher at a record, Nasdaq added 0.5%, and the Dow rose 0.2%, also reaching a new high. August gains remain strong: Dow +3.4%, S&P 500 +2.6%, Nasdaq +2.8%.
Investors will also watch earnings from Ulta Beauty (NASDAQ:ULTA), Ambarella (NASDAQ:AMBA), and Affirm Holdings (NASDAQ:AFRM).
End of “De Minimis” Exemption
The U.S. has ended duty-free treatment for packages under $800, removing the “de minimis” exemption. Trump announced the repeal on July 30, citing risks of fentanyl trafficking.
The exemption had fueled cross-border ecommerce, with 1.36 billion shipments worth $64.6 billion entering in fiscal 2024—73% from China. U.S. consumers may now face higher costs unless retailers absorb tariffs.
European Inflation in Focus
Preliminary consumer price data from France, Spain, and Germany is expected today. The ECB held its key rate at 2% in July, confirming inflation near its target. Policymakers are expected to maintain rates in September, though minutes from July showed disagreement on inflation prospects. The ECB noted that uncertainty over U.S. tariffs “would remain a key feature of the global and euro area economic outlook for some time to come,” though the impact remains debated.
Oil Prices Mixed
Oil dipped but is set for a weekly gain. Brent fell 0.7% to $67.54 a barrel and WTI dropped 0.7% to $64.12. Weekly gains were supported by concerns over Russian supply and stalled peace talks between Russia and Ukraine. The end of the U.S. summer driving season and Labor Day weighed on prices. Both contracts face monthly losses of over 6%, pressured by steady OPEC production.
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