Hot import prices meet soft bank results as Nasdaq futures stay heavy

• US: S&P 500 futures are trading 0.13% higher at 7,801 and Nasdaq 100 futures are 0.22% lower. They are the only live read on the US day. On Thursday the Dow closed up 1.08% at 52,177.69 and the S&P 500 finished 0.33% higher at 7,744.06. The Nasdaq Composite ended just 0.08% firmer.
• Europe: The DAX is up 0.95% at 25,624.84 and the Euro Stoxx 50 has gained 0.67%. The CAC 40 is trailing at +0.33% and the FTSE 100 is barely changed, up 0.05% at 10,846.3.
• Asia: The Nikkei closed 1.39% higher at 65,324.29 and the Kospi rose 2.05%, a bounce after a week in which it lost 11.22%. The Hang Seng added 0.52% and Shanghai 0.24%.

The week's main story is still inflation and how the Federal Reserve responds. Wednesday's September CPI showed prices up 3.7% on the year against 3.6% expected, with core inflation also above forecast. That briefly pushed the market-implied odds of a rate rise at the Fed's late-October meeting above 40%. Late on Thursday, Fed Chair Kevin Warsh declined to say what the Fed would do in October, calling the October and December meetings 'decision points'. Hike odds have since fallen back sharply, which is why bond yields have stopped climbing even though the inflation data keeps running hot.

This morning added more of the same. September import prices rose 1.1% on the month against about 0.9% expected, driven mainly by a jump in fuel import prices. US 10-year Treasury yields are up 1.1bp at 5.10%, so the bond market has largely shrugged off the number. Short-dated bill yields are 2.8bp lower, which fits with the market pricing out an immediate rate rise.

Underneath the indices, money is moving out of technology. Chip stocks extended their losing run on Thursday. Investors moved into health care, smaller companies and the Dow's industrial and financial names, which matter less to the AI trade. Nasdaq futures falling while S&P futures edge up shows that rotation is continuing. US oil has fallen 2.16% to $95.85 while Brent is barely changed at $106.02. We found no clear catalyst for that gap.

Appetite for risk is fine overall but narrow. The VIX, Wall Street's main measure of expected volatility, has eased to 16.0. By PrimerIQ's count, US gainers outnumbered losers 4,002 to 1,945 on Thursday, a broad advance. Sector performance was very uneven, though: health care gained 1.86% while technology fell 0.65% and energy 1.58%. Bond-market volatility is the warning sign. The MOVE index closed at 102.49, up 22.43% over the past month. Gold has risen 0.64% to $4,196.90 and the dollar index has slipped 0.23% to 101.77, which suggests investors are still buying some protection.

The 08:30 ET import price index was the morning's main data release. It rose 1.1% on the month against expectations of about 0.9%, the latest in a series of hot inflation readings that included Wednesday's CPI and Thursday's producer prices. Elsewhere, euro-area September inflation was confirmed at 3.8%, unchanged from the first estimate. September industrial production is due at 09:15 ET, with economists expecting a 0.4% monthly gain after a flat August and capacity utilisation seen at 76.5%. The federal budget balance follows at 13:00 ET and data on foreign flows into US securities at 15:00 ET.

The regional banks reporting this morning have been received coolly despite beating on profit. Citizens Financial earned $1.41 a share, ahead of the roughly $1.39 expected, but missed on revenue and deposits and fell in pre-market trading. Truist's adjusted earnings of $1.16 also beat, but a $1.45bn loss from selling lower-yielding bonds to reinvest at higher rates hit its revenue. Travelers' core earnings of $9.18 a share were well ahead of the $7.36 consensus, yet the shares slipped, with attention on $538m of catastrophe losses and fewer personal auto policies.