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US STOCK FUTURES EDGE DOWN WITH IN-LINE CPI

The main U.S. equity index futures are modestly negative after the release of the latest consumer price index $(CPI)$. Given this is the February CPI data, and prior to recent spikes in energy prices, Middle East developments remain front and center.

E-mini S&P 500 futures EScv1 are now off around 0.15% on the day vs. roughly flat just before the data came out.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.18% which is flat with where it was just before the numbers were released. The yield ended Tuesday at 4.136%.

February headline CPI on a month-over-month basis was 0.3%, and the year-over-year number was 2.4%. Both of these readings were in line with the estimates. Core CPI on a month-over-month basis was 0.2%, while the year-over-year core print was 2.5%, which were also as expected.

Separately, the mortgage market index came out at 389.6 vs. 377.5 last week.

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 99% vs. just before the data was released. The chance that the FOMC cuts rates by 25 basis points is 1%.

Interest rate probabilities are now pricing in a total of just over 34 basis points of cuts through December 2026 vs. about 36 basis points just before the numbers came out.

Nearly all S&P 500 .SPX sector SPDR ETFs are quoted down in premarket trading. Financials XLF.P, off about 0.5%, is taking the biggest hit. Technology XLK.P, up about 0.3%, is the sole gainer.

The SPDR S&P Regional Banking ETF KRE.P is down around 0.7%.

Regarding the CPI data, Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, said:

"The report didn't dramatically change my point of view but it didn't help improve it."

Pavlik added, "If the war wasn't going on and we weren't seeing oil going crazy I'd look at this report as not all that helpful and slightly negative. Because we do know that oil is going to have a negative impact on consumer prices there's nothing in this report that helps change my mind to be more positive on inflation. It's rising and it's a matter of by how much and for how long."

Here is a premarket snapshot from just shortly before 9:00 a.m. ET:

(Terence Gabriel, Sinéad Carew)

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