US pre-open: Stock market futures pointing higher ahead of PCE inflation data

Wall Street futures were pointing clearly higher ahead of the release of another batch of economic data, including on inflation.

It was against that backdrop that investors were positioning themselves ahead of Consumption and inflation data due out in the US later in the session.

Reflecting the market mood, Stephen Innes at SPI Management said: "with 10 y US yields shooting higher on the back of a sharp drop in weekly jobless claims and an upward revision to 1Q23 GDP growth [the day before] -- stock pickers may still be concerned that the data points to a stronger economy than the Fed wants and likely puts more at stake on tonight PCE inflation report."

At 1200 BST, Dow Jones mini futures were up 102 points to 34,455.0, alongside a 16.75 point gain in those tracking the S&P 500 to 4,452.50, while the Nasdaq-100 mini contract was 73.75 points higher at 15,174.0.

The yield on the benchmark 10-year US Treasury meanwhile was grinding higher by three basis points to 3.878%.

According to the CME's Fed Watch tool, traders were discounting 89.3% odds of a 25 basis point interest rate hike at the 28 July policy meeting and a 40.8% probability of another 25bp hike by November.

Despite the seemingly generalised optimism around the US, overnight Ian Shepherdson at Pantheon Macroeconomics told clients that there were downside risks to the US inflation numbers about to be released.

Similarly, of the US jobs markets he said: "The increase in [weekly unemployment] claims from last fall’s low already is consistent with a clear slowing in payroll growth; it’s coming."

For his part, Michael Hartnett at BofA reminded clients that the US unemployment rate of 3.4% in April was reminiscent of the all-time low of 0.7% hit during that same month of 1929.

He also highlighted how the US budget deficit - at 8% of GDP - was the biggest in six decades - outside of wars and recessions.

Overnight, China's National Bureau of Statistics said that its manufacturing sector Purchasing Managers' Index improved from a reading of 48.8 for May to 49.0 in June.

However, the non-factory PMI slipped from 54.5 to 53.2 (consensus: 53.5).

The U.S. Department of Commerce would release its personal income and spending figures June at 1330 BST

Included in that report would be the core price deflator for personal consumption expenditures, the Federal Reserve's preferred measure of inflation (consensus: 0.3% month-on-month).

As an aside, Innes also noted interventions by Chinese authorities to support the country's currency, the yuan, but added that for things to improve what was needed was fiscal support and not interest rate cuts.

Also due out on Friday afternoon were MNI Chicago's factory sector index for June and a final reading on US consumer confidence for the same month out of the University of Michigan.

Boeing shares were edging up on news that machinists at key supplier, Spirit AeroSystems, had approved their new contract.