Nasdaq set to lead tentative Wall Street rebound ahead of July CPI

The Nasdaq is expected to lead a tentative recovery on Wall Street when trading gets underway, with investors on edge ahead of the release of July CPI data tomorrow. Nasdaq futures point to a 0.3% gain, S&P 500 futures are up 0.2%, and Dow futures are 0.1% higher.

The Nasdaq led Wall Street lower at Monday's close, down 0.3%, with the Dow off 0.1% and the S&P 500 down just 4 points, as surging oil prices put inflation and rate expectations back in focus.

Markets are heading into US CPI with inflation anxiety back in the driving seat, as Brent's four-day surge forces investors to rethink last week's post-payrolls relief. Government bonds are selling off across Asia-Pacific, the dollar remains firm, gold has broken higher, and the yen is again under pressure. The central issue is straightforward: softer US jobs data reduced the odds of an immediate Fed hike, but oil near $88/bbl makes it much harder for policymakers to sound comfortable.

US 10-year yields rose 6bps to 4.71% ahead of the Asian session, with Treasury futures weakening and regional bonds following the US lead, despite cash Treasury trading being closed for a Japanese holiday.

Brent crude is holding near $87.75/bbl after a four-session rally that's pushed it over 12% above last week's low, as hopes of reopening the Strait of Hormuz fade following President Donald Trump's fresh demand for compensation from Iran.

With Friday's soft jobs data no longer enough to ease inflation worries alone, the oil-driven CPI risk is putting the Fed in an increasingly awkward spot. Meanwhile, across the Atlantic, London's FTSE 100 spent much of the morning session in and out of the red and is currently flat. The Paris CAC 40 has drifted...