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Futures, Global Markets Storm Higher As Inflation Fears Fade Away

US index futures rose with for a second day alongside global markets as a continued drop in commodity prices helped ease fears about inflation risks. Treasuries advanced, cryptocurrencies rebounded from a Thursday rout while the dollar slumped. After a bruising week that saw the biggest one day drop for the S&P since February, higher S&P 500 and Nasdaq 100 contracts signaled a market recovery was gaining momentum.

The three main U.S. stock indexes snapped a three-day losing streak on Thursday after better-than-expected weekly jobless claims data while ignoring the highest annual PPI increase on record. At 7:15a.m. ET, Dow e-minis were up 150 points, or 0.44%, S&P 500 e-minis were up 26 points, or 0.63%, and Nasdaq 100 e-minis were up 132 points, or 1.00%.

As Bloomberg notes, markets are regaining their equilibrium at the end of their biggest retreat in 11 weeks, with the focus of the benefits of an economic rebound overriding worry about the negative side-effect of inflation, for now. That may help to reinvigorate the reflation narrative of picking value shares tied to economic growth over pandemic stay-at-home favorites. Meanwhile, the Fed again reassured markets about the transitory nature of inflation. Among Fed speakers overnight, Governor Christopher Waller signalled that rates won’t rise until policymakers either see inflation above target for a long time or excessively high inflation. He also said he would only get worried if inflation rose above 4%, defining the Fed’s first real “red-line.”

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