Stock futures rise as Wall Street awaits key inflation report

Treasury yields slide ahead of CPI

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

The return of the benchmark index 10-year Treasury bond and 2-year Treasuries were down about 5 basis points each, trading at 3.314% and 3.525% respectively. The yield on the The 30-year Treasury bond was down about 4 basis points to 3.477%.

Bond yields move opposite to price and one basis point is equal to 0.01%.

Treasury yields rose in September as Federal Reserve officials pledged to continue their fight against inflation even if it causes short-term damage to the economy.

—Jesse Pound

Avoid Rent the Runway, says Barclays

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

“The significant deterioration in active customer trends during the quarter (QoQ active undergrowth slowed to -8% in 2Q vs. Street +7%, decelerating by +17% in 1Q) suggests that RENT is more sensitive to macro pressure on the aspirational consumer than we expected” analyst Michael Binetti wrote in a note.

Shares of Rent the Runway fell more than 22% in the pre-market after the company announced it was laying off 24% of its workforce.

—Sarah Min

The dollar falls for the fifth day in a row

The dollar index, which tracks the performance of the U.S. currency against six others, fell for a fifth straight day, potentially giving stocks a boost. Many large US companies derive a large portion of their revenue from outside the United States, which means a weaker dollar could boost their revenue.

The index traded down 0.5% to 107.76.

Chinese electric vehicle maker BYD can rally nearly 40%

BYDa Chinese electric vehicle maker, could make big gains in the future, according to Barclays.

“BYD (Build Your Dream) became the world’s leading electric vehicle maker by shipments in 2Q22, knocking Tesla off that pedestal for the first time, and its triple-digit revenue growth rate is expected to continue for the remainder of 2022, despite its already large base,” analyst Jiong Shao wrote in a Tuesday note.

The analyst also has a price target of $40 per share on the stock, implying a 38% upside from Monday’s close.

CNBC Pro subscribers can Read the full story here.

—Sarah Min

UK unemployment hits lowest level in 48 years as real wages fall sharply

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

The economic inactivity rate, meanwhile, 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 long-term illness designations and students leaving the workforce. Rising labor market tensions could fuel new inflationary pressures and cause headaches for bank of england.

Annual real wage growth—adjusted for inflation—excluding bonuses fell 2.8% in the three months to end-July.

“People will naturally look to their employers for help during the cost of living crisis, while Andrew Bailey hopes companies don’t raise wages too quickly and make inflation worse “said Marcus Brookes, chief investment officer at Quilter Investors.

“However, the UK must prepare for public sector discontent with pay strikes continuing as budgets are stretched.”

-Elliot Smith

UBS plans to increase its dividend; shares rise in pre-market

UBS The group plans to increase its dividend by 10% to $0.55 per share and expects its share buybacks in 2022 to exceed $5 billion, the Swiss bank announced on Tuesday.

UBS shares were listed up 1.2% in pre-market activity after what ZKB analyst Michael Klien called another surprise.

Learn more here.

—Reuters

European equities edge up

European stocks were cautiously higher on Tuesday morning as global markets braced for the latest reading of US inflation.

The pan-European Stoxx 600 rose 0.3% in early trading, with food and beverage stocks adding 0.8% to lead the gains as most sectors and major exchanges moved into positive territory. Retail inventories slipped 0.4%.

CNBC Pro: Want to invest in real estate? These REITs are among analysts’ favorites

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

Morgan Stanley and Citi analysts highlight REITs in two sectors they believe could outperform the broader market and remain resilient in a downturn.

CNBC Pro subscribers can learn more here.

—Weizhen Tan

Fed actions this month could be ‘eventless’ for asset prices, says Ameriprise

The upcoming Federal Reserve meeting in September, when the central bank is expected to raise interest rates, is likely already priced into the market, according to Anthony Saglimbene, chief market strategist at Ameriprise.

“In our view, central bank actions this month are likely a non-event for asset prices,” he wrote in a Monday note. “However, incoming economic data over the coming weeks and months and its influence on political actions next year could play a much larger role in guiding stocks over the medium term..”

Markets now expect the Fed to hike rates by 0.75 percentage points, meaning assets may not move much if that is the central bank’s decision. A consumer price index report on Tuesday that comes in line with expectations also might not move the needle.”

“Unless last month’s inflation numbers change much more than expected, including Wednesday’s update on August’s producer price index (PPI), we think a rise of 75 basis points from the Fed is essentially stuck at this point,” he said.

—Carmen Reinicke

Relief rally is likely a bear market bounce, says Wells Fargo

According to Wells Fargo, the recent relief rally in equities is likely another bear market bounce and investors should position themselves for more turmoil to come.

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

Such reversals occur in nearly every bear market and many are quickly reversed, leaving investors with regrets, they added.

“While it is difficult to predict the bottom of a bear market, in the past, market bottoms were generally preconditioned by overly pessimistic market sentiment and a sign of definite improvement in the economic or undervalued market problem. underlying,” Ma said. “We don’t think we’re there yet either way.”

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

—Carmen Reinicke

US stock futures rise ahead of Tuesday’s CPI report

U.S. stock futures were up Monday night as Wall Street eagerly awaits the August consumer price index report due out Tuesday morning. The report will give investors an update on the inflation situation in the United States and is one of the last data the Federal Reserve will see before its September meeting.

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

—Carmen Reinicke

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