By Anna Hirtenstein 

U.S. stock futures held steady Tuesday ahead of fresh data that is expected to show consumer prices climbed sharply in March.

Futures tied to the S&P 500 wavered between gains and losses. The broad-market index is hovering near its recent record closing high. Futures on the technology-heavy Nasdaq-100 were also relatively flat.

Investors in both stocks and bonds are seeking to assess whether the projected U.S. economic recovery will trigger a sharp rise in inflation that may remain for a protracted period. Policy makers have repeatedly said they expect any increase over the next few months will prove to be fleeting. A sharp uptick in inflation expectations earlier this year led to a rise in bond yields, and damped appetite for richly valued technology stocks last month.

The U.S. consumer price data for March is due out at 8:30 a.m. ET.

"The equity market is a bit stretched in valuation," said Ludovic Subran, chief economist at Allianz. "If yields are going a bit higher on the back of stronger inflation, a lot of institutional investors could rotate their portfolios out of very risky equities to less risky bonds and still get quite a comfortable margin."

In bond markets, the yield on the 10-year Treasury note ticked up to 1.693%, from 1.674% on Monday, climbing for the third consecutive trading session. Yields rise when bond prices fall. The 10-year yield shot up as high as 1.749% at the end of March, from 0.915% near the start of the year.

Monica Defend, global head of research at asset manager Amundi, said she expects more volatility in the bond market this year.

"This is what we worry about the most," Ms. Defend said. "Inflation expectations will play a role at the same time as growth will be tested, in terms of the robustness of the recovery."

Higher bond yields could weigh on equity markets by creating a more attractive alternative to stocks, she said. But stocks will probably continue to climb as long as the economy grows, even if inflation moves higher, she added.

Overseas, the pan-continental Stoxx Europe 600 ticked up 0.3%.

In Asia, most major benchmarks rose by the close of trading. Japan's Nikkei 225 Index added 0.7% and Hong Kong's Hang Seng Index advanced 0.2%.

The Shanghai Composite Index retreated 0.5% after data showed that Chinese exports in March had risen less than economists had expected, resulting in a smaller trade surplus than anticipated.

Bitcoin rose nearly 3% to a record, trading close to $62,500 apiece, according to data from CoinDesk. Coinbase, the largest U.S. cryptocurrency exchange, is planning to go public on Wednesday.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

 

(END) Dow Jones Newswires

April 13, 2021 05:16 ET (09:16 GMT)

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