S&P, Nasdaq, Dow futures tick up ahead of retail sales numbers

Stock index futures pointed to a higher open Thursday as the rates markets continued to backtrack from the post-CPI spike in yields.

S&P futures (SPX) +0.2%, Nasdaq 100 futures (NDX:IND) +0.1% and Dow futures (INDU) +0.2% were higher.

Yields continued to slip following some dovish Fed speak on Wednesday and chances of March rate cut edged back above 10% after being close to zero after the hot retail inflation figures.

“As Chicago Fed President Goolsbee reminded markets yesterday, the Fed’s inflation goal is based on the core PCE number, and not CPI,” Deutsche Bank’s Jim Reid said. “In addition, some of the strong services CPI drivers we saw in Tuesday’s print do not enter the PCE calculation and are instead taken from the PPI.”

“A known dove, Goolsbee also stated ‘inflation can be (a) bit higher and still on track to 2%’ and that he does not ‘support waiting until inflation at 2%” before the Fed cuts,'” Reid added. “Whether he represents the views of the rest of the committee is open to some debate given his dovish history but for yesterday it was enough to calm the market to some degree.”

The 10-year Treasury yield (US10Y) feel 4 basis points to 4.23%. The 2-year yield (US2Y) fell 1 basis point to 4.57%.

The 10-year “tapped out on kissing 4.33% (a key technical level),” ING said. “It may well be that that is the top for this week, as Thursday likely sees a tame theme from retail sales and industrial production, and then we’re into a Friday that will feature sub-2% producer price inflation and confirmation of sub-3% inflation expectations.”

January retail sales figures arrive before the bell. The forecast is for a 0.2% decline, with core sales, ex-autos, rising 0.2%.

“US retail sales do not adjust for price changes, so auto sector price discounts may lower the headline number,” UBS’ Paul Donovan said. “Otherwise, it is foolish to short the hedonism of the US consumer; this week’s consumer price data release confirmed that middle income homeowners have strong spending power. However, aside from restaurant spending, the retail sales does not capture spending on having fun.”

At the same time weekly initial jobless claims are due. Economists expect little change at 219K.

Two Fed manufacturing measures for February also hit. The Empire State manufacturing index is seen rising to -13.7 and the Philly Fed is forecast to have risen to -8.

January industrial production is due right before the start of trading. The consensus is for a rise of 0.2%.

Business inventories for December and the February NAHB housing market index are due shortly after the start of trading.