February 07, 2025 at 02:26PM
US stocks are marginally higher as implied by the futures in premarket trading. The small gains are not being hurt by higher yields, but being helped by the prospects of a solid economy. Inflation concerns are there, but not a worry just yet:
Dow industrial average of 43 points
S&P index up 3 points
NASDAQ index up 9 points
Meta is trading higher by 0.66% in premarket trading, and looking to close higher for the 15th consecutive day.
Amazon shares are lower at -2.7% in premarket trading after announcing better-than-expected earnings but with lower guidance.
AMD shares are still biased to the downside after disappointing earnings as weak from the data center. Shares are down -5.5% this week.
Nvidia and Broadcom, are beneficiaries. Shares of Nvidia are marginally higher today but up over 7.5% for the week. Shares of Broadcom, are also higher today and up 6.5% this week (see Chip stocks showdown: AMD, Nviida and Broadcom Analysis).
Looking at the US debt market:
2year yield 4.264%, +5 point basis points
5-year 4.341%, plus it 20 basis points
10 year 4.496%, +5.9 basis points
30 year 4.698%, +5.2 basis points
This morning after the jobs report, Minneapolis Fed Pres. Neil Kashkari on CNBC noted that around 40% of the recent rise in 10-year yields since September is due to inflation compensation, while 60% is driven by real rates. He suggested that markets may be signaling a higher neutral rate, though fiscal deficits could also be a factor.
Regarding the upcoming jobs report, Kashkari emphasized that the most important figure is the 4.0% unemployment rate. He highlighted that economic feedback suggests strength, and the Fed aims to maintain this stability while bringing inflation back to target.
Kashkari acknowledged the past nine months of inflation data as positive and questioned the need to keep rates at current levels if inflation continues to decline. He expects the Fed funds rate to be “modestly lower” this year but cautioned that inflation may not return fully to 2% in 2025 due to structural factors. The Fed will also monitor policy influences such as taxes, tariffs, and immigration before making further adjustments.
This article was written by Greg Michalowski at www.forexlive.com.
