Welcome to Super Thursday when in a double whammy of market-moving events we will first find out how the ECB intends to adjust monetary policy as Europe brings the pandemic under control (we expect no material changes), and we will also get to see whether the startling jump in April’s U.S. inflation numbers persisted or even accelerated in May, perhaps rising by the most on record. Needless to say, markets could move substantially on any surprises and yet, listless futures are trading as if nothing notable will take place and with both the ECB announcement and a sharply higher CPI already priced in, they may be right.
In a session that was anything but exciting, S&P futures traded in yet another narrow range ahead of the ECB and CPI data, which is expected to show that the consumer price index increased 0.5% last month after surging 0.8% in April, the largest gain since June 2009, as speedy vaccinations helped re-open the economy. Oil edged higher while the dollar was unchanged. S&P 500 E-minis were up 2.5 points, or 0.07% at 07:15 a.m. ET. Dow E-minis were up 63 points, or 0.18%, while Nasdaq 100 E-minis were down 32 points, or 0.22%.
Traders were on edge to see if the upcoming U.S. inflation print changes perceptions of when the Federal Reserve might begin talks about tapering asset purchases. While the Fed has reiterated that the spike in inflation would be transitory, investors fear that a bigger-than-expected surge could push the central bank into tightening policy earlier than signaled. As a result, the FOMC meeting next week will be closely watched for any signals. The labor market and inflation are two key factors for the Fed to consider tightening, and while inflation has risen, recent payrolls data was underwhelming. Investors were also watching for weekly jobless claims data, due at 8:30 a.m. ET, although that too was not enough to prompt a notable move in futures.