Pre-Market Futures Have Fingers Crossed for Trade Deals

Tuesday, June 10, 2025

Pre-market futures are climbing back to early-morning highs at this hour, as the most consequential of new economic reports don’t hit the tape until tomorrow and Thursday. Talks resume today in London between the U.S. and China, and a breakthrough on that front in the trade war would be a compelling reason to drive markets higher.

On the other hand, any reported impasses on this front might be seen as a wet blanket for market growth. We can see by the generally positive daily returns this month that market participants are ready to hear some good news: the Dow is up +2.5% off late-May lows, the S&P is +3.4% over that time, the Nasdaq is +4.2% and the small-cap Russell 2000 +5.3%.
 

Small Business Survey Improves in May

Earlier this morning, the latest NFIB Small-Business Index came out for the month of May, looking better than it has in the previous couple months. A headline of 98.8 was 3 points higher than anticipated (95.9 was the consensus estimate), just above the index’s long-term average, which reaches back 51 years. The 12 month high was back in December, when this index reached 105.1.

Among those small-business owners surveyed, uncertainty was still high — likely reflecting the still-murky tariff policy looking forward. We’re now within the final month of the 90-day tariff pause, with so far very little progress made. That said, a plurality of owners said taxes, not tariffs or inflation, are the biggest problem facing their businesses currently — 18%. The last time the survey named taxes as the top issue was back in 2020.
 

What to Expect from the Stock Market This Week

Wednesday morning brings us the all-important Consumer Price Index (CPI) for May, which is expected to rise steadily month over month by +0.2% and +0.3% on core (stripping out volatile food & energy costs), while the year-over-year Inflation Rate is expected to tick up 10 basis points (bps) to +2.4%, core year over year to +2.9%.

Thursday’s Producer Price Index (PPI) reported those same +2.4% and +2.9% on core year-over-year rates last month for the wholesale side. Expectations are for month-over-month headline PPI to swing back to positive +0.2% from April’s -0.5%, with core expected to fetch +0.3% growth last month, from -0.1% previously.

None of these would be bad numbers — and there is always a possibility they could surprise to the downside, which would be good for disinflationary aspirations. But should these figures come in as expected, at levels still above the Fed’s optimal +2% inflation rate and moving the wrong direction, you can write it in ink that the Fed will not cut interest rates at its next FOMC meeting starting a week from today.

In fact, despite early-year projections that the economy would be in a good place to start cutting rates this month, currently it’s September that’s the odds-on favorite for the first 25 bps rate cut this year. Also, more analysts and economists are projecting no new moves from the Fed’s current +4.25-4.50%, which has been in place from December, for the entirety of 2025.

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