- Ahead of the release of an important US inflation indicator that may strengthen the argument for Federal Reserve interest rate cuts starting in March, US equities futures and bond yields both slightly declined on Friday.
- Futures on the US Nasdaq 100 and S&P 500 retreated slightly.
- The broader STOXX 600 equity index flatlined, hovering near the highest since January 2022.
- The US core personal consumption expenditures price index, which is the preferred inflation statistic by the Fed, is traders' main focus this week ahead of the long Christmas weekend.
- While 10-Yr US Treasury yields dropped three basis points, holding just off five-month lows, swaps traders are pricing in roughly 150 BPS of Fed cuts next year, twice as much as the central bank has signalled. These bets are weighing on the US dollar, which is at five-month lows against its G10 rivals.
- Meanwhile, following reports indicated that the economy contracted in the third quarter, borrowing costs for the British government fell to levels that were almost eight months lower.
