WallStreet Futures Rise Due Interest Rate and Inflation Data

U.S. stock index futures rose on Friday, indicating a positive week closure for Wall Street. Investors are eager to understand how interest rates affect inflation as they await key inflation figures later in the day amid a data- and earnings-heavy week. The Dow snapped its longest winning streak since 1987 in the previous session as U.S. Treasury yields pressured stocks lower, following news of the Bank of Japan’s move to allow long-term interest rates to rise.

Chipmaker Intel (INTC.O) surprised the market with a quarterly profit, signaling an easing in the PC market slump. The company’s forecast for third-quarter earnings above Wall Street expectations led to a 7.1% premarket surge in its shares. Other chipmakers like Nvidia (NVDA.O), Micron Technology (MU.O), and Marvell Technology (MRVL.O) also gained between 0.6% and 1.2%.

Investors are closely watching the Fed’s preferred inflation gauge, interest rate, the personal consumption expenditures (PCE) price index, to be released later in the day. Economists predict the core PCE price index to have risen 4.2% in the 12 months through June, indicating the potential of cost push inflation.

As the week comes to an end, all three major U.S. indexes are marginally higher, boosted by strong earnings from Big Tech, expectations of the Fed’s monetary policy tightening ending, and optimism about the U.S. economy’s soft landing.

Markets React to Bank of Japan’s Bond Purchase Policy Adjustment

Shares in Europe and Asia experienced mixed movements on Friday, reacting to the Bank of Japan’s adjustments to its bond purchase policy while keeping its negative benchmark interest rate unchanged.

The Bank of Japan made its yield curve control policy more flexible and eased its defense of a long-term interest rate cap. These moves, perceived by investors as a precursor to a shift away from massive monetary stimulus, had mixed effects on different markets.

Japan’s central bank decided to keep its benchmark interest rate at minus 0.1% at the policy meeting, opting for a nimbler approach due to uncertainties in the economy and prices. The 10-year Japanese government bond yield rose following the announcement, as the Bank of Japan offered to buy those at a 1% yield each business day, increasing the upper limit from the previous 0.5% under its “yield curve control program.” The central bank’s aim remains to keep long-term interest rates near zero percent.

Tokyo’s Nikkei 225 experienced some volatility but closed 0.4% lower, while shares in Japanese banks saw gains. European markets showed mixed performances in early trading, with Germany’s DAX edging 0.1% lower, the CAC 40 in Paris declining 0.3%, and London’s FTSE 100 rising 0.2%.

U.S. futures rose, and oil prices fell amidst the market reactions to the Bank of Japan’s policy adjustments. The week’s developments indicate the financial markets’ sensitivity to central bank policies and their potential implications on global economies and investments.