Dow futures experienced a modest decline on Friday in anticipation of the forthcoming release of the Federal Reserve’s key inflation indicator. Inflation figures in Europe are also on the agenda, as the Trump administration has concluded its “de minimis” exemption.

Investors are set to concentrate on the upcoming release of the U.S. personal consumption expenditures price index, which serves as the Federal Reserve’s favored measure of inflation. This data will be pivotal as they look for greater insight into the trajectory of interest rates for the remainder of the year. Expectations indicate that the rate is anticipated to remain unchanged at 0.3% on a monthly basis, resulting in an annual rate of 2.9%. Nonetheless, there exists the possibility that the data could uncover additional indications of U.S. President Donald Trump’s extensive tariffs permeating consumer prices, subsequent to a recent unexpected increase in producer inflation. The central bank reduced its policy rate by a full percentage point last year; however, it has maintained steady rates this year, expressing concerns that the elevated tariffs imposed by Trump could potentially reignite inflation, which remains above the Fed’s 2% target. Expectations abound This position is anticipated to conclude in September with a reduction of 25 basis points; however, the subsequent developments remain ambiguous. On Thursday, a Federal Reserve Governor expressed a desire to initiate rate cuts next month and “fully expects” additional reductions to align the Fed’s policy rate with a neutral stance. Waller and the Fed Governor expressed dissent regarding the Federal Reserve’s choice to maintain short-term borrowing costs at their current levels in July. Both individuals were appointed by Trump and are reportedly being considered as potential successors to Fed Chair Jerome Powell, in light of market apprehensions regarding the politicization of the central bank. Earlier this week, Trump announced the termination of Fed Governor Lisa Cook, citing potential mortgage fraud as the reason. Cook contends that this action is unlawful and is pursuing legal measures to prevent it.

Dow futures experienced a slight decline, yet they are poised to achieve substantial monthly gains in anticipation of forthcoming significant inflation data. At 03:20 ET (07:20 GMT), the futures were down by 5 points, representing a decline of 0.1%. Additionally, futures experienced a drop of 35 points, also reflecting a decrease of 0.1%, while Dow futures decreased by 80 points, corresponding to a 0.2% fall. The major indices experienced a positive session on Thursday, with the S&P 500 finishing up 0.3% at a record high. The NASDAQ Composite increased by 0.5%, whereas the other index concluded the day with a gain of approximately 0.2%, marking yet another record high. The 30-stock Dow has recorded a 3.4% increase thus far in August, indicating a trajectory towards substantial monthly gains. The S&P 500 has experienced an increase of 2.6% thus far this month, while the tech-centric Nasdaq has risen by 2.8%. Investors will concentrate on crucial inflation metrics later in the session, highlighted by the release of the July personal consumption expenditures index. Investors will also digest results from the likes of Affirm Holdings.

The Trump administration on Friday terminated U.S. duty-free imports of packages valued at less than $800, effectively abolishing the “de minimis” exemption that has contributed to a significant increase in shipments from international sellers to U.S. consumers. On July 30, President Donald Trump declared the repeal of duty-free treatment for parcels from all countries, set to take effect a month later. He stated that this exemption has facilitated traffickers in sending parcels containing fentanyl into the nation with relative ease. Nonetheless, the de minimis exemption facilitated a significant increase in cross-border ecommerce, resulting in 1.36 billion shipments arriving under de minimis, with a declared value of $64.6 billion in fiscal 2024. U.S. government data indicates that approximately 73% of de minimis packages entering the United States in 2024 originated from China. U.S. consumers are poised to encounter elevated prices, as the tariffs render shipments from international retailers to the U.S. more costly, unless the sellers choose to absorb these tariff expenses.

During the session, significant inflation figures are anticipated in Europe, particularly focusing on the preliminary consumer prices from France, Spain, and Germany. The central bank maintained its key rate at 2% during the July meeting, and subsequent data has validated that the eurozone economy remains resilient while inflation stays aligned with the ECB’s 2% target. ECB policymakers are anticipated to maintain rates at their current levels in September. However, minutes from the July meeting revealed a division among them regarding the future trajectory of inflation, indicating a forthcoming debate that is likely to intensify in the months ahead. A significant factor contributing to uncertainty is the effect of U.S. tariffs on European economies, following the announcement by the Trump administration of a 15% duty on imports of EU goods. The ECB policymakers recognized that this uncertainty “would remain a key feature of the global and euro area economic outlook for some time to come”, yet they held differing views on the magnitude of its impact on the economy.

Oil prices have declined, yet are poised for a weekly increase, as traders assess the uncertainty surrounding Russian supply alongside the nearing conclusion of the significant U.S. summer driving season. At 03:20 ET, the price of crude oil declined by 0.7% to $67.54 a barrel, while U.S. West Texas Intermediate crude futures also experienced a 0.7% decrease, settling at $64.12 a barrel. Both contracts are poised to achieve weekly gains of nearly 1%, as prices have risen following Ukrainian assaults on Russian oil export terminals, which have cast uncertainty on Russian supply. Additionally, the absence of a meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky has further fueled skepticism regarding the peace process. However, the conclusion of the U.S. summer driving demand period, marked by the Labor Day holiday on Monday, has exerted downward pressure on prices. On a broader scale, both contracts are poised to experience monthly losses exceeding 6%, influenced by consistent production increases from the Organization of the Petroleum Exporting Countries.