Reuters, Sydney/New York Ahead of U.S. consumer pricing data that can change the outlook for monetary policy in the country, global markets remained flat on Wednesday. Investors also awaited the large banks' results to meet their extremely high expectations.

In Asia, U.S. equities futures were largely flat. Prior to the British consumer inflation report, which may lead to another round of gilt selling, UK FTSE futures were 0.2% higher and pan-European STOXX 50 futures were up 0.1%.

While Japan's Nikkei fluctuated between gains and losses and ended the day 0.3% lower, MSCI's broadest index of Asia-Pacific stocks outside of Japan fell 0.2%.

Yields and the Japanese yen were the major forces. The market now believes there is a 70% likelihood that the Bank of Japan will raise interest rates in January after Governor Kazuo Ueda stated that policymakers would talk about the possibility next week, which caused the dollar to drop 0.4% to 157.3 yen.

Japanese ten-year government bond yields reached their highest level since 2011 at 1.255%.

The U.S. CPI data, which is anticipated later on Wednesday, will have a significant impact on markets. Risks are tilted to the positive, with forecasts focussing on a modest 0.2% increase in the core measure. The unrelenting selling in global markets and bonds may resume if the reading is significant, at 0.3% or higher.

"A pivot data point is this CPI print. A solid results quarter is anticipated to support the rally, which is likely to be reignited by a dovish print," JPMorgan analysts wrote in a note to investors.

"A hawkish print could see the 10Y yield make a run at 5%, increasing volatility across all asset classes, and continuing to pressure equities."

Surprisingly mild December producer pricing data for the United States was released overnight, with the core measure remaining unchanged for the month. As a result, short-term Treasury rates were lowered from their peak and the US dollar was constrained. The S&P 500 ended the day up 0.1%.

Although the first cut was not completely priced in until September, futures continued to price in only 29 basis points of easing from the Fed this year. The PPI report caused 10-year Treasury rates to initially decline, but they later recovered and closed the day only a hair below the peak of 4.809%.

The benchmark U.S. yield in Asia fell 1 basis point to 4.778% on Wednesday.

Ahead of Wednesday's release of the fourth-quarter 2024 profits from some of the largest U.S. banks, including Citi and JPMorgan, investors are also getting ready. It was anticipated that lenders will post higher profits due to active trading and dealmaking.

The UK is once again in the limelight in Europe after government bonds fell to 16-year lows due to worries over its fiscal prospects. It is anticipated that headline inflation was stable at 2.6% last month in the local CPI report, which is scheduled on Wednesday.
Just a hair over a one-year low of $1.2099, the pound fell 0.1% to $1.2198.

After closing Tuesday more than 1% down, oil prices were up in commodities markets. [O/R]

Brent was up 0.4% at $80.21, while U.S. crude increased 0.5% to $77.92 a barrel.