(Bloomberg) — US equity index futures rose on Thursday, ahead of key US inflation data that could determine how much further the Federal Reserve’s policy-tightening cycle will run.

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Futures contracts on the S&P 500 were up 0.5% as of 5:55 a.m. in New York, while those on the Nasdaq 100 gained 0.3%. The benchmark index had tumbled to its lowest since November 2020 yesterday, as concerns mounted about the impact of hawkish Fed policy, especially on rate-sensitive sectors such as semiconductors. Europe’s Stoxx 600 gauge steadied, while on currency markets, the dollar slipped.

Upcoming monthly consumer-price figures may determine if the Federal Reserve delivers a fourth-straight outsized hike in interest rates. Thursday’s data is expected to show a slight deceleration to 8.1% annually but all eyes are on the ‘core’ reading that excludes food and energy. This is seen rising 6.5% from a year earlier, returning to a four-decade high hit in March.

Any sign that price pressures remain elevated may send markets into sell mode, as on Wednesday, when an above-forecast producer prices reading erased a tentative stock rally. It would also boost Treasury yields and the dollar, potentially adding to its nearly 15% year-to-date gain.

“The question on everyone’s minds is whether rate hikes, easing energy prices and reduced supply chain constraints are feeding into the economy and lowering price pressures,” said Sumit Kendurkar, senior trader at Optiver in Amsterdam. “If September’s producer price index is any indication, that may still not be the case.”

However investors note the Fed is already more or less priced to raise rates by about 75 basis points next month, and most markets have fallen sharply in recent weeks.

The aggressive policy-tightening and expectations of more to come have sent the link between the S&P 500 and Citigroup Inc.’s widely followed surprise index for the US economy to the most negative since 2015.

Read more: Inflation Data Calling the Shots as Market Correlations Snowball

The third-quarter company earnings season also kicks off this month and the key question for investors is whether profit margins remained resilient amid surging costs. That’s especially so for chip companies, which have issued a string of warnings in recent days.

Applied Materials Inc. was the latest to slash fourth-quarter earnings forecast, citing the Biden administration’s new chip export control rules, while Taiwan Semiconductor Manufacturing Co. cut its 2022 capital spending target.

On currency markets, the dollar eased against most other currencies and US 10-year Treasury yields held off multi-year highs hit recently.

“If (core US CPI) comes in below expectations, you can anticipate a pretty aggressive dollar selloff as we can then start to price in a peak in the Fed funds rate,” said Peter Kinsella, head of currency strategy at asset manager UBP.

Investors in Britain were waiting to see whether the Bank of England will extend its Oct. 14 deadline to end an emergency bond-buying program it launched to soothe markets. It has so far declined to do so. However, long-dated bonds rallied sharply and the pound firmed as the recent selloffs lured in buyers.

Key events this week:

  • Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.

  • US CPI, initial jobless claims, Thursday

  • G-20 finance ministers and central bankers meet, Thursday

  • China CPI, PPI, trade, Friday

  • US retail sales, business inventories, University of Michigan consumer sentiment, Friday

  • BOE emergency bond buying is set to end, Friday

Some of the main moves in markets:

Stocks

  • Futures on the S&P 500 rose 0.5% as of 5:55 a.m. New York time

  • Futures on the Nasdaq 100 rose 0.3%

  • Futures on the Dow Jones Industrial Average rose 0.5%

  • The Stoxx Europe 600 rose 0.1%

  • The MSCI World index fell 0.1%

  • Futures on the S&P 500 rose 0.5%

  • Futures on the Nasdaq 100 rose 0.3%

  • The MSCI Asia Pacific Index fell 0.9%

  • The MSCI Emerging Markets Index fell 1.1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro rose 0.3% to $0.9729

  • The British pound rose 0.4% to $1.1147

  • The Japanese yen was little changed at 146.80 per dollar

  • The offshore yuan fell 0.2% to 7.1927 per dollar

Cryptocurrencies

  • Bitcoin fell 0.9% to $18,988.84

  • Ether fell 1.9% to $1,273.75

Bonds

  • The yield on 10-year Treasuries was little changed at 3.90%

  • Germany’s 10-year yield declined two basis points to 2.29%

  • Britain’s 10-year yield declined 12 basis points to 4.31%

Commodities

  • West Texas Intermediate crude rose 0.6% to $87.75 a barrel

  • Gold futures rose 0.3% to $1,682.80 an ounce

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