Markets in Flux: Inflation Data Awaited Amidst Bond and Tariff Speculations

European stocks and U.S. futures rose following a bond market moderation. Investors remain cautious ahead of impending U.S. inflation data and President-elect Trump's term commencement. Speculation around tariffs boosts global equities. Japan's Nikkei dipped, while oil steadied after U.S. sanctions on Russia. Focus remains on inflation and corporate earnings.

European stocks and U.S. futures experienced an uptick on Tuesday as a sell-off in bond markets showed signs of moderation. However, investor caution prevailed ahead of key U.S. inflation data set for release on Wednesday and the anticipated commencement of U.S. President-elect Donald Trump's second term next week. Nasdaq 100 futures climbed 0.7% in the European session after the index's drop on Monday, while S&P 500 futures showed a 0.51% rise.

Global equities found some relief as speculation about a slower approach towards tariffs surfaced. Reports emerged of U.S. aides considering incremental tariff increases to boost leverage without risking inflation spikes. Meanwhile, Japan's Nikkei slumped amid investor concerns over a potential Bank of Japan rate hike, as emphasized in a speech by Deputy Governor Ryozo Himino.

Oil prices steadied after a recent spike following enhanced U.S. sanctions on Russia, with benchmark Brent futures trading around $80.80 a barrel. The euro and Japan's yen saw slight gains against the dollar, which hit a high not seen in over two years. As the U.S. earnings reporting season begins, investors grapple with the trade-offs between strong corporate profits and the risks of elevated inflation.

(With inputs from agencies.)