US pre-open: Futures lower as monetary policy remains in focus

Wall Street futures were in the red ahead of the open on Wednesday as market participants continued to mull over the future of monetary policy.

As of 1245 GMT, Dow Jones futures were down 0.32%, while S&P 500 and Nasdaq-100 futures were 0.35% and 0.47% weaker, respectively.

The Dow closed 231.86 points lower on Tuesday as traders returned from the Martin Luther King Jr Day break to some more bank earnings and news from the Republican Party's Iowa caucus.

Wednesday's primary focus will likely be December's retail sales numbers, with the data likely offering further insight into the state of the US economy. Economists expect to see retail sales rise 0.4% last month, up ever-so-slightly from November's 0.3% increase.

The yield on the benchmark ten-year Treasury note crossed the psychologically important 4% mark yet again on Tuesday afternoon after Federal Reserve governor Christopher Waller cautioned that easing monetary policy may come at a slower rate than anticipated. The ten-year note was sitting roughly one basis point higher at 4.076% prior to the open.

Also drawing an amount of investor attention, traders weighed some weaker-than-expected GDP data out of China.

On the macro front, US mortgage applications surged by 10.4% in the week ended 12 January, the biggest increase in twelve months, according to the Mortgage Bankers Association of America, extending the 9.9% jump seen in the previous week. The increase comes as lower mortgage rates continue to make homeownership more of a reality for Americans as a result of expectations that the Federal Reserve will announce its first round of interest rate cuts during the first quarter. Applications to purchase a new home rose by 9%, while applications to refinance a home loan jumped by 11%.

Still to come, December's import/export price index will be out at 1330 GMT, as will last month's retail sales data, while December industrial production and capacity utilisation numbers will be published at 1415 GMT, and the NAHB's January housing market index and November business inventories were slated for release at 1500 GMT.

Federal Reserve bankers Michael Barr, Michelle Bowman and John Williams will all deliver speeches throughout the day.

In the corporate space, Charles Schwab, US Bancorp and Prologis will report earnings on Wednesday.

Reporting by Iain Gilbert at Sharecast.com