US Session: Mixed Start for US Indices US Inflation Data

Mixed Performance in U.S. Futures as Bond Yields Decline

U.S. futures showed a mixed performance shortly after the market opened, while bond yields declined following the latest U.S. inflation data, which strengthened expectations that the Federal Reserve will have room to cut interest rates at least twice this year. Stocks are aiming for a rebound after a sell-off that erased the S&P 500’s gains for 2025. This comes after data showed that the Fed’s preferred inflation gauge rose moderately last month, following a series of reports that raised concerns about inflation gaining momentum again.

U.S. Treasuries saw minor movements, the dollar fluctuated, and Bitcoin remained under pressure. The Core Personal Consumption Expenditures (PCE) Price Index, which excludes food and energy, increased by 0.3% from December. On an annual basis, it rose 2.6%, marking the smallest yearly increase since early 2021. Inflation-adjusted consumer spending declined by 0.5%, the largest monthly drop in nearly four years.

While additional rate cuts are likely still months away, this report supports the case for one or two reductions in 2025. We believe inflation is a problem of the past and that data will continue to improve moving forward. The decline in personal spending confirms the weak retail sales data seen earlier, suggesting that the economy started 2025 on shaky ground. Combined with weak February data, growth is becoming an increasing concern on Wall Street. Consumers may finally be giving in to economic pressures.

Shortly after market open:

• S&P 500: +0.09%
• Nasdaq 100: -0.19%
• Dow Jones Industrial Average: +0.24%

This report has a dual effect: PCE matched expectations, which is relatively good news, but personal spending was much weaker than anticipated, raising concerns over the sharp contraction in consumption. We remain cautious about the market, given the high current valuations, political uncertainty faced by companies, and the widespread belief that the risk of a recession is minimal (or extremely low).