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U.S. stocks nudged modestly higher in late-morning trading Tuesday, while Treasury yields added to recent gains and the dollar gave back gains against its global peers as investors parsed through a key inflation reading ahead of the Federal Reserve's two-day policy meeting in Washington.
Updated at 1:11 PM EST
Solid, but not spectacular
The Treasury's last big coupon auction of the year, a $21 billion sale of 30-year bonds, came off fairly well, with modestly better buying interest and a positive after-market move.
Investors placed bids that total just over $51 billion, setting a bid-to-cover ratio of 2.43, just ahead of the 2.4 tally recorded at last month's auction. Indirect investors, which are mostly comprised of foreign central banks, took down 68.5% of the sale, up from around 60% at the prior sale.
Updated at 11:37 AM EST
Vol's not well
The market's key volatility gauge, the CBOE Group's VIX index, hit the lowest levels in nearly four years todays as investors appear to content to ride recent gains into tomorrow's Fed rate meeting and beyond.
The VIX was last marked 54 cents lower on the session at $12.09, a move that suggests traders are pricing in daily moves in the S&P 500 of around 0.76%, or 35 points, for each of the next 30 days. That compares to estimates of a 57 point swing back in mid-October.
Updated at 11:18 AM EST
Auction up next
Stocks are nudging into positive territory on the session as Treasury yields settle following the November inflation report, with markets likely now focused on a $21 billion auction of 30-year bonds later in the session.
The S&P 500 was last marked 5 points higher, or 0.1%, while the Nasdaq gained 31 points and the Dow added 104 points to last night's January-high close.
Updated at 9:45 AM EST
Powell may be smiling
Stocks are drifting lower in the opening hour of trading, with the S&P 500 down 13 points, or 0.28%, following the modestly faster-than-expected November inflation report and another move higher in Treasury yields.
The Dow was down 15 points while the Nasdaq slipped 40 points.
The moves may, to some degree, satisfy Fed Chairman Jerome Powell, who has been at pains to warn markets that they were getting over their skis in terms of 2024 rate cut bets.
Related: Fed Chair Powell can lean into rate cut bets after sticky November inflation report
Updated at 9:03 AM EST
Second reading?
Treasury yields are moving higher in the wake of the November inflation report, which showed a 0.3% rise in monthly core pressures, taking benchmark 2-year notes to around 4.741% and 10-year notes to around 4.235%.
Updated at 8:43 AM EST
Sticky wicket
The Commerce Department's November inflation report was largely as advertised, with a headline reading of 3.1% and a modestly quicker monthly gain of 0.1%.
Sticky core prices, however, which held at an annualized rate of 4%, may complicate the Fed's near-term rate messaging as policymakers begin their two-day meeting in Washington.
Stocks were little-changed from the release, with futures tied to the S&P 500 indicating a 9 point opening bell gain and 10-year Treasury yields rising 2 basis points to 4.218%.
Related: Inflation slows again in November, but stubborn core supports Fed rate caution
Updated at 7:41 AM EST
Darkening Mood?
The National Federation of Independent Business, a lobby group representing the backbone of American industry, noted a modest dip in its small business optimism index in November amid a longer pullback in capital spending plans and increased difficulty in obtaining bank credit.
The downside move, while modest, suggests the kinds of pressure the bulk of American companies face from the Fed's "higher-for-longer" rate mantra, and its broader efforts to tame inflation, heading into the coming year.
Stock Market Today
Economists are looking for a modest easing in headline inflation over the month of November, with year-on-year reading of 3.1%, amid a big month-on-month decline in gasoline prices. Core price pressures, meanwhile, are likely to hold at an annualized rate of 4% thanks in part to downside moves for rents and non-housing services costs.
Data from the New York Fed yesterday showed inflation expectations in fact fell to the lowest levels in more than two years, following a similar reading from the University of Michigan's consumer-confidence survey last week.
Collectively, the assessments, as well as a solid auction of $37 billion in reopened 10-year notes, clipped U.S. Treasury yields ahead of today's CPI data. The benchmark paper was marked 10 basis points (0.1 percentage point) lower from yesterday's auction levels at 4.193%.
The Treasury will also auction $21 billion in 30-year bonds later in the session.
The U.S. dollar index, meanwhile, was marked 0.33% lower against a basket of six global currency peers. It was trading at 103.75 in early New York dealing, reflecting both bets on a near-term Fed interest-rate cut but also upside moves in both the pound and the euro ahead of their respective central-bank rate decisions later this week.
Global oil prices were also trending lower, with WTI crude down 21 cents on the session at $71.11 a barrel. That's before a private-sector reading of domestic U.S. stockpiles from the American Petroleum Institute later in the session.
On Wall Street, futures tied to the S&P 500 are indicating a 3 point opening bell gain while those tied to the Dow Jones Industrial Average are suggesting a 70 point advance. Futures tied to the Nasdaq, meanwhile, are indicating a 32 point bump.
In overseas markets, European stocks were little changed from last night's close, and holding near the highest levels since March, ahead of the U.S. CPI data release. The Stoxx 600 was marked 0.08% lower in early Frankfurt dealing and Britain's FTSE 100 rose 0.4% in London.
Overnight in Asia, investors were focused on high-level meetings between Communist Party officials in Beijing that some analysts speculate could lead to deeper fiscal stimulus for China's moribund economy.
The regionwide MSCI ex-Japan index was marked 0.58% higher heading into the close of trading while the Nikkei 225 ended 0.16% higher in Tokyo.
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