US pre-open: Stocks seen retreating from record highs; bond yields in focus

US futures pointed to a weaker open on Wall Street on Wednesday after all three indices closed at record highs in the previous session, as investors eyed speeches from Fed officials.

At 1215 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.5%, while Nasdaq futures were off 0.7%.

On Tuesday, the main indices notched record highs, while the benchmark 10-year US Treasury yield hit its highest level since March, breaching 2.5%. The move in Treasuries came after the Bank of Japan decided to scale back its monthly bond purchases.

Oanda analyst Craig Erlam said reports from a Chinese official that the country is considering cutting or halting its purchases of US Treasuries were weighing on sentiment, as they pushed the 10-year yield close to 2.6% on Wednesday.

"If the reports turn out to be true and China no longer sees Treasuries as an attractive option, the repercussions could be significant as the country is one of the biggest holders of US debt. A significant change in policy could put considerable upside pressure on US yields, the result of which would be an effective tightening for the US. US 10-year yields spiked on the reports but have since settled and are up around three basis points on the day, having already risen in line with other countries yields on Tuesday.

"The tightening effect of such measures would likely have an impact on how many times the Federal Reserve raises interest rates this year, which is why we’ve seen a corresponding drop in the dollar. The euro has spiked back above 1.20 against the dollar on the back of the reports before settling just below, while cable has moved back into the green on the day having been down around half a percent earlier in the session."

In corporate news, Sears was likely to be in focus after saying it has raised $100m in new financing and is looking to raise another $200m from other counterparties.

Shares in Supervalu were also likely to be active after the release of the retailer's third-quarter numbers, while Eastman Kodak surged in pre-market trade after the company said it was launching a cryptocurrency.

United Continental Holdings rose after the airline said late on Tuesday that traffic was up 2.7% on the year in December.

Technology giant Apple was a touch lower after it faced new question from the US and France over its battery-related performance issues with iPhones.

On the data front, the import price index for December is scheduled for release at 1330 GMT, while wholesale inventories are at 1500 GMT. Also, Chicago Fed President Charles Evan is due to give a speech at the Lake Forest Club economic breakfast, while Dallas Fed President Robert Kaplan will be speaking at two events in Dallas and St. Louis Fed President James Bullard will give a presentation at a 2018 Economic Outlook event in St. Louis.