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Stock futures rise as Wall Street awaits key inflation report

Stock futures rise as Wall Street awaits key inflation report
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Treasury yields slide ahead of CPI

US Treasury yields were in retreat on Tuesday morning less than an hour before the release of a major inflation report.

The return on the benchmark 10 year treasury note and the 2-year government bond was down about 5 basis points each, trading at 3.314% and 3.525%, respectively. The return on the 30-year government bond down about 4 basis points to 3.477%.

Bond yields move inversely to price and one basis point equals 0.01%.

Treasury yields rose in September as Federal Reserve officials pledged to continue their fight against inflation, even if it hurts the economy in the near term.

— Jesse Pound

Stay away from Rent the Runway, says Barclays

Barclays downgraded Rent the Runway’s shares to neutral from outperformance, citing concerns about the company’s active subscriber growth.

“The sharp deterioration in trends in active customers during the quarter (QoQ growth in active contractors slowed to -8% in Q2 vs. Street +7%, decelerating from +17% in Q1) suggests that RENT more vulnerable to macro pressures on the discerning consumer than we anticipated,” Analyst Michael Binetti wrote in a note.

Rent the Runway shares fell more than 22% in premarket trading after the company announced it would lay off 24% of its corporate workforce.

– Sarah Min

Dollar falls for fifth straight day

The Dollar Index, which tracks the US currency’s performance against six others, fell for the fifth straight day, potentially boosting shares. Many large US companies get a large portion of their income from outside the US, meaning a weaker dollar could boost their income.

The index was down 0.5% at 107.76.

Chinese electric vehicle manufacturer BYD is up almost 40%

BYDa Chinese electric vehicle maker, could see big profits going forward, according to Barclays.

“BYD (Build Your Dream) became the No. 1 global electric vehicle maker in terms of deliveries in Q2 22, dethroning Tesla from that pedestal for the first time, and its triple-digit revenue growth rate is likely to continue through the remainder of 2022 despite its already substantial base,” analyst Jiong Shao wrote in a note Tuesday.

The analyst also has a $40-per-share price target for the stock, which means it has 38% upside potential from Monday’s close.

CNBC Pro subscribers can do this Read the whole story here.

– Sarah Min

UK unemployment hits 48-year low as real wages fall sharply

Unemployment in the UK fell to 3.6% in the three months to July, the lowest level since 1974.

Meanwhile, the inactivity rate rose 0.4 percentage points to a five-year high of 21.7%.

The Office for National Statistics attributed the change to an increase in terms for long-term illnesses and students exiting the labor market. The increasing tightness in the labor market could further fuel inflationary pressures and pose a headache for the economy Bank of England.

Annual growth in real wages – adjusted for inflation – excluding bonuses fell by 2.8% in the three months to the end of July.

“People will understandably turn to their employers for help during the cost of living crisis, while Andrew Bailey hopes companies don’t over-inflate salaries too quickly and fuel inflation,” said Marcus Brookes, chief investment officer at Quilter Investors.

“Britain, however, must brace for discontent in the public sector as strikes continue over pay as budgets are tight.”

-Elliot Smith

UBS plans dividend increase; Shares rise premarket

UBS Group plans to increase its dividend by 10% to $0.55 per share and expects its share buybacks to top $5 billion in 2022, the Swiss bank said on Tuesday.

UBS shares appeared 1.2% higher in premarket activity after ZKB analyst Michael Klien called surprising news.

Read more here.

– Reuters

European stocks slightly higher

European stocks edged higher Tuesday morning as global markets braced for the latest US inflation data.

The pan-European Stoxx 600 Soared 0.3% in early trade, with food and beverage stocks up 0.8% to propel gains as most sectors and major bourses surged into positive territory. Retail shares fell 0.4%.

CNBC Pro: Do ​​you want to invest in real estate? These REITs are among analysts’ favourites

Real estate investment trusts — or REITs — are back in the limelight after a volatile year for many asset classes.

Analysts at Morgan Stanley and Citi are highlighting REITs from two sectors that they say could outperform the broader market and remain resilient in a recession.

CNBC Pro subscribers can read more here.

— Wheat Tan

Fed actions this month may be “non-event” for asset prices, says Ameriprise

According to Ameriprise chief market strategist Anthony Saglimbene, the market is already pricing in the upcoming September Federal Reserve meeting, when the central bank is expected to hike interest rates.

“In our view, central bank actions this month should not be an event for asset prices,” he wrote in a note Monday. “However, the economic data coming in over the coming weeks and months and its impact on policy action next year could play a much more significant role in shaping stock direction over the medium term.”

Markets now expect the Fed to hike rates by 0.75 percentage point, meaning assets may not move much if that’s the central bank’s decision. A CPI report on Tuesday that is in line with expectations may not move the needle either.”

“Unless inflation numbers have changed significantly more than expected over the past month, including Wednesday’s Producer Price Index (PPI) update, we believe a 75 basis point hike by the Fed is essentially locked in at this point,” he said.

– Carmen Reinicke

Recovery rally is likely bear market recovery, says Wells Fargo

The recent recovery rally in stocks is likely another bear market upleg, and investors should brace for more volatility in the future, according to Wells Fargo.

“Year-to-date, the outperformance of defensive high-yield, high-quality and low-valued stocks reminds investors of the hallmark of a bear market,” global portfolio and investment strategist Chao Ma wrote in a note Monday.

Such rallies happen in almost every bear market, and many are quickly reversed, leaving investors with regret, they added.

“Although it is difficult to predict the bottom of a bear market, historical market bottoms have typically been predetermined by overly dovish market sentiment and a sign of eventual improvement in underlying economic or market problems,” Ma said. “We believe that we are not quite there in both respects.”

In the meantime, Ma recommends investors look for defensive stocks with low volatility, high dividends, and share buyback yields. He also says investors should go for high-quality names with profitability and leading market shares and affordable market prices.

– Carmen Reinicke

US stock futures rise ahead of Tuesday’s CPI report

US stock futures were higher Monday night as Wall Street eyes the August CPI report due Tuesday morning. The report will give investors an update on the inflation situation in the US and is one of the last data the Federal Reserve will see ahead of its September meeting.

Dow Jones Industrial Average futures were up 55 points, or 0.17%. S&P 500 and Nasdaq 100 futures were up 0.18% and 0.21%, respectively.

– Carmen Reinicke

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