Inflation Relief Lifts Futures as Earnings Season Begins

US index futures have moved higher this morning following a softer-than-expected inflation report, with NASDAQ futures up 1.4% and Dow futures steady. US consumer price growth eased to 3.5% from 4.2%, coming in below the 3.8% Street estimate. Attention now turns to interest rates, with Fed Chair Warsh scheduled to begin his first semiannual testimony to Congress today.

Earnings season has started with a mixed reaction to results from the major US banks. Goldman Sachs* is up about 2.0% in premarket trading, while JPMorgan Chase, Wells Fargo, Citigroup and Bank of America are all down about 2.0%. IBM is down 22.7% premarket after pre-announcing EPS of $2.93 v. Street $3.01.

Overseas, the Nikkei gained 0.7%, the Hang Seng rose 0.5% and Shanghai advanced 1.5%. China’s trade balance reached $125.6B v. Street $121.0B, while export growth of 27.0% v. Street 18.2% and import growth of 36.0% v. Street 24.0% also exceeded expectations. In Europe, the DAX is down 0.8% and the FTSE has declined 0.4%.

Energy prices are climbing amid renewed concerns about passage through the Strait of Hormuz and the potential cost of future tolls. Crude Oil is up 2.3% near $80.00/bbl, Brent Crude has gained 3.7% near $86.50/bbl and Gasoline is up 2.56% near $3.25/gallon. Strong Chinese trade data may also be supporting raw material demand, with Gold up 0.7% above $4,000/oz, Copper gaining 1.3% above $6.35/lb and Silver rising 0.6%.

The US Dollar Index is down 0.6%, while the Euro and Loonie have each gained 0.6%. The US 10-year Treasury note yield is steady near 4.55%, and the 30-year yield remains near 5.05%.

Morgan Stanley, BlackRock and United Airlines report earnings on Wednesday. The Bank of Canada is widely expected to maintain its benchmark interest rate at 2.25% when it meets that day. Fed Chair Warsh testifies on Tuesday and Wednesday, while upcoming economic reports include China GDP and retail sales and US producer prices on Wednesday, followed by US retail sales on Thursday.

Shares of Goldman Sachs are held in some portfolios managed by SIA Wealth Management.

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