U.S. futures steady as Fed, economic woes weighed

U.S. equity-index futures traded slightly higher even as sentiment remained fragile after the Federal Reserve signaled inflation-busting rate hikes will continue despite a weakening economy.

September contracts on the S&P 500 and Nasdaq 100 rose about 0.1 per cent after the underlying benchmarks posted losses on Wednesday. The two-year Treasury yield, the most sensitive to monetary tightening, fluctuated as investors parsed some dovish elements in the minutes of the Fed’s latest meeting. The dollar rose for a second day. Cisco Systems rose in New York premarket trading after issuing an upbeat sales forecast. 

While policy makers warned against over-tightening and signaled the potential for slower rate increases at some point, they also flagged the risk of inflation pressures becoming entrenched. The nuanced messaging wasn’t dovish enough for markets to sustain a risk-on stance into Thursday. Caution was the byword of the moment with further clues awaited at the Fed’s annual symposium in Jackson Hole, Wyoming next week.

“People are a little overly optimistic about how likely it is that we can solve the inflation problem quickly and in a way where we don’t have to include more policy and more rising rates,” Kathryn Kaminski, AlphaSimplex Group chief research strategist and portfolio manager, said on Bloomberg Television.