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US STOCK FUTURES FIRM UP SLIGHTLY, YIELDS SLIP, AFTER SOFT CPI

The main U.S. equity index futures have strengthened slightly after the release of January consumer price data.

E-mini S&P 500 futures EScv1 are now up around 0.1% on the day vs. a loss of around 0.2% just before the data came out.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.08%. It was around 4.10% just before the numbers came out. The yield ended Thursday at 4.104%.

January headline CPI on a month-over-month basis was 0.2% vs. a 0.3% estimate. The year-over-year number was 2.4% vs. a 2.5% estimate. The core CPI on a month-over-month basis was 0.3% vs. a 0.3% Reuters Poll. The year-over-year core reading came in at 2.5% vs. a 2.5% estimate.

According to the CME's FedWatch Tool, the probability that the Fed sits on its hands and leaves its current target rate of 3.50%-3.75% unchanged at its March 17-18 FOMC meeting is unchanged at 90% vs. just before the data was released. The chance that the FOMC cuts rates by 25 basis points is 10%.

Interest rate probabilities are pricing in a total of 60.6 basis points of cuts through December 2026 which is flat vs. just before the numbers came out.

A majority of S&P 500 .SPX sector SPDR ETFs are higher in premarket trading. Tech XLK.P, up only around 0.4%, is posting the biggest rise. Materials XLB.P, off around 0.3%, is the weakest group.

The SPDR S&P Regional Banking ETF KRE.P is up around 0.3%.

Regarding the CPI data, Skyler Weinand, chief investment officer at Regan Capital, based in Dallas, with $3.8 billion in assets under management, said:

"Friday's delayed CPI for January was muted and in-line with expectations and it won't increase the likelihood of a rate cut within the next few months largely because of Wednesday's blowout employment numbers, which threw ice cold water on any hopes of a near-term rate cut.

Weinard added, "The Fed is always in a tug of war between balancing inflation with employment, but they just can't cut rates right now with the economy having just created a six-figure jobs number."

Here is a premarket snapshot from around 8:52 a.m. ET:

(Terence Gabriel, Karen Brettell)

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