Here are the most important news, trends and analysis that investors need to start their trading day:
- Stock futures flat as investors await key inflation report
- 10-year Treasury yield reaches its highest level since December 2018
- March CPI expected to show hottest inflation since 1981
- U.S. monitoring claims of possible Russian chemical attack in Ukraine
- Shanghai’s weekslong lockdown eases for some residents
1. Stock futures flat as investors await key inflation report
Stock futures were little changed Tuesday morning as Wall Street anticipated a key inflation report. A day earlier, all three major U.S. equity indexes pulled back as the yield on the 10-year Treasury note touched a three-year high and intensified concerns about an economic slowdown. The Dow Jones Industrial Average on Monday declined 413 points, or 1.19%, while the S&P 500 slid 1.69%. The Nasdaq Composite — home to many growth stocks that are more sensitive to higher interest rates — dropped 2.18%.
The tech-heavy Nasdaq is down about 5.7% month to date. The S&P 500 has dropped 2.6%, while the blue chip Dow has fallen roughly 1.1%.
2. 10-year Treasury yield reaches its highest level since December 2018
The 10-year U.S. Treasury yield traded at its highest point since December 2018 on Tuesday morning, reaching 2.82% before retreating somewhat to 2.798%. The move in bond yields comes ahead of the March consumer price index report, which the Labor Department is set to release at 8:30 a.m. ET on Tuesday.
Treasury yields, which move inversely to prices, have climbed rapidly in recent weeks. As recently as March 7, the 10-year U.S. Treasury yield was below 1.7%. However, yields have surged as the bond market braces for more aggressive policy tightening from the Federal Reserve. In March, the U.S. central bank raised interest rates for the first time in more than three years, and an even larger hike is anticipated at its May meeting.
3. March CPI expected to show hottest inflation since 1981
The consumer price index for March is projected to show an 8.4% increase on an annual basis, according to Dow Jones estimates. That would be the largest year-over-year jump since December 1981. Economists also anticipate a monthly rise of 1.1%. In February, consumer prices increased 0.8% on a month-over-month basis and 7.9% over the past 12 months.
The CPI, which tracks a wide-ranging collection of goods and services, has for months been running at its hottest levels in decades. The Fed’s policy tightening is being done in an attempt to tamp down that historically high inflation.
Higher food and rent costs are expected to be important contributors to March’s inflation reading. However, energy prices will be especially watched in Tuesday’s report. They are projected to show major increases due to the oil price spike in early March, which was related to the Russia-Ukraine war.
4. U.S. monitoring claims of possible Russian chemical attack in Ukraine
The U.S. is monitoring unconfirmed reports of a potential Russian chemical weapons attack in the Ukrainian port city of Mariupol, Pentagon press secretary John Kirby said Monday night. While Kirby indicated the U.S. has not verified the accounts, he said they are “deeply concerning.” The unconfirmed reports also are “reflective of concerns that we have had about Russia’s potential to use a variety of riot control agents, including tear gas mixed with chemical agents, in Ukraine,” Kirby said in a statement.
British Foreign Secretary Liz Truss said the U.K. is working to verify details of the possible attack, which originally was a Telegram message posted by an ultra-nationalist part of the Ukrainian National Guard called the Azov Regiment. The message claimed Russian forces used “a poisonous substance of unknown origin.”
5. Shanghai’s weekslong lockdown eases for some residents
Shanghai’s Covid lockdowns eased for some residents Tuesday, more than two weeks after the strict public health protocols were put in place as coronavirus infections rose. Local media reported nearly 5 million people live in parts of Shanghai where restrictions are being relaxed because no new cases were detected in that area for at least two weeks. While those residents are able to leave their homes, Reuters reported there was some confusion about just how freely they could move.
Shanghai is China’s largest city, home to about 26 million people. Concerns about the humanitarian and economic impact of the strict lockdowns has intensified in recent days. On Monday, the U.S. State Department told all nonemergency government staff and their family members in Shanghai to leave the city.