Key facts
- Fed Governor Christopher Waller stated inflation data will be more critical than payrolls for interest rate decisions.
- Global bond yields have surged, with Japan's 10-year yield reaching 3% for the first time in 30 years.
- Traders are pricing in a nearly 50% chance of a Fed rate hike at the next meeting.
- US stock futures and Nasdaq 100 E-mini futures advanced ahead of the August jobs report.
- Lululemon and Adobe shares fell in premarket trading due to company-specific news.
U.S. stock futures climbed on Friday as traders awaited key jobs data, which could influence the Federal Reserve's interest rate outlook. Federal Reserve Governor Christopher Waller's recent comments suggested that upcoming inflation data, particularly the Consumer Price Index (CPI), will be more critical than the August non-farm payrolls report in determining the central bank's next move.
Waller's remarks have tempered rate-hike expectations, with traders now pricing in a nearly 50% chance of an increase, down from 63% prior to his comments. This focus on inflation over labor market trends has led some analysts to question the Fed's decision-making process, though the jobs report is still expected to set the tone for the market.
Globally, bond yields have surged due to rising energy prices and significant sovereign borrowing. Japan's 10-year government bond yield reached 3% for the first time in three decades, sparking discussions about capital repatriation and potential Bank of Japan policy shifts. The European Central Bank is also expected to raise rates by 25 basis points this week.
In premarket trading, Lululemon Athletica shares dropped significantly after slashing its profit and revenue forecasts, while Adobe saw a decline following the announcement of a CEO transition. Investors are also contemplating the historical seasonal weakness of September for stocks, which typically occurs in the latter half of the month.