Here are five things you must know for Friday, February 11:
1. -- Stock Futures Slide As Rate Bets, Bond Yields Leap
U.S. equity futures slumped lower Friday, following on from a leap in Treasury bond yields an accelerating bets on faster rate hikes from the Federal Reserve, as markets continue to reverberate from yesterday's searing January inflation report.
The CME Group's FedWatch tool now suggests an 88% chance of a 50 basis point rate hike when the Fed meets next month, up from just 33% last week, following data from the Commerce Department showing January inflation sped to an annual rate of 7.5%, the fastest since 1982.
St. Louis Fed President James Bullard has also said he wants the Fed's base lending rate to be 1% higher by June, a move that would require three consecutive 25 basis point increases, while Goldman Sachs is forecasting seven hikes before the end of the year in order to tame inflation pressures that are unlikely to ease for many months.
The new calibrations hit tech stocks hard yesterday, hiving more than 2.1% from the Nasdaq Composite, with ripple effects felt in markets from Shanghai to Frankfurt in overnight trading.
To compound the issue, the gap between benchmark 10-year and 2-year note yields has narrowed to just 40 basis points, a move towards 'inversion' that, along with Brent crude nearing $100 per barrel, has many economists now beginning to worry about recession. The Atlanta Fed's GDPNow forecasting tool, a real-time benchmark, suggests the U.S. economy is only growing at a 0.7% clip in the first quarter, down from 6.9% over the three months ending in December.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a 110 point opening bell decline while those linked to the S&P 500 are priced for a 20 point retreat.
Nasdaq Composite futures are indicating a further 85 point slide for the tech-focused benchmark as 10-year Treasury note yields hold at 2.001% in overnight trading, the highest levels since November of 2019.
2. -- Saturday Fed Hike Fever?
A spike in short-term Treasury bond yields, as well as big gains for the dollar in overnight trading, have some investors betting on the chances of an emergency Fed rate hike this weekend.
Odds of Saturday rate hike between now at the March meeting, the first since October of 1979, have jumped to around 25%, according to data from Bank of America's weekly "Flow Show" report, following yesterday's faster-than-expected inflation reading which showed headline consumer prices rising a 7.5% clip, the fastest since 1982 and well ahead of the 7.1% pace recorded in Mexico -- where base rates sit at 5.5% -- over the same month.
The Flow Show report also notes that, while the 1979 rate hike came amid a period of Fed tightening, the central bank has injected more than $200 billion in excess liquidity into the markets over the past 27 trading days through its quantitative easing purchases, "a sum greater than market cap of Netflix (NFLX)".
3. -- Zillow Shares Surge After Q4 Sales Beat, Home Flipping Wind-Down
Zillow Group (ZG) shares surged in pre-market trading after the online real estate platform posted stronger-than-expected fourth quarter revenues and said it would wind-down its home flipping business earlier than forecast.
Zillow generated revenues of $3.88 billion over the three months ending in December, well ahead of Street forecasts, and posted a net loss of $261 million.
Zillow also said it would quicken the wind-down of its Zillow Offers business, which purchases homes directly through its site for near-term resale, following a $405 million write-down to its existing inventory of homes over the past two quarters.
Looking into the coming year, Zillow said it wants to launch what it calls a 'super app' for the housing market that integrates the house-hunting, purchase and mortgage markets.
Zillow shares were marked 13.6% higher in pre-market trading to indicate a Friday opening bell price of $54.36 each.
4. -- Ford, GM Shares Slip As Canada Trucker Protests Slow Production
Ford (F) and General Motors (GM) shares moved lower in pre-market trading after the carmakers said that trucker protests in Canada would cause further production delays at their north American plants.
The so-called 'Freedom Convoy' of trucks that has blocked the Ambassador Bridge crossing between Windsor, Ontario and Detroit, Michigan, a key delivery hub between the two economies, has caused delays in car part deliveries and triggered slowdowns in production at plants in southern Ontario. GM, meanwhile, has completely halted production at a site in Michigan that builds SUVs.
The moves come as both automakers are already suffering capacity issues linked to the global shortage in semiconductors, with Ford halting production at eight north American factories, including one that produces the F-150 pickup, only last week.
Ford shares were marked 0.8% lower in pre-market trading to indicate an opening bell price of $17.94 each while GM slipped 0.6% to $50.03 each.
5. -- Elon Musk 'Highly Confident' For SpaceX Orbit Flight This Year
Billionaire Tesla (TSLA) CEO Elon Musk said late Thursday he is "highly confident" that his other venture, the privately-owned SpaceX, would launch a rocket into the Earth's orbit before the end of the year.
Speaking at a media event at SpaceX's 'Starbase' facility in Boca Chica, Texas, Musk said the group's developing Raptor 2 engines would soon be ready to carry the flagship Starship into orbit this year, with the ultimate aim of manned missions to Mars in the coming decade.
The Texas facility, however, is under an environmental assessment by the Federal Aviation Administration that could delay the commercial space company's plans. Musk said the approval could take "a couple of months", but cautioned that "we don't have a ton of insight into where things stand with the FAA."
Tesla shares were marked 0.3% lower in pre-market trading to indicate a Friday opening bell price of $901.75 each.
