USA MARKET REBOUND AMID CENTRAL BANK LEADERSHIP CHANGE TALK

US stock futures ticked higher on Friday, after basic materials and technology stocks bounced in the regular session to lift the S&P 500 and Nasdaq Composite indices, but all three major US averages are on track to snap five consecutive weeks of gains. Inflation data continued to be at the center of investor attention as markets assess how surprisingly elevated price levels could impact the Fed's rate hike plans.

Meanwhile, US 10-year Treasury yields were around 1.57% on Friday as the market reopens following the Veterans Day holiday the day before, while investors continue to digest prospects that inflation will stay high for longer than expected which could force the Fed to tighten soon. Meanwhile, five-year yields climbed to 1.26% and a gauge of the yield curve flattened to the least since March 2020.

Basic materials stocks rebounded sharply by rising 2.38% as a group. EV companies Rivian Automotive (22%) and Lucid Group (10%) outperformed in regular trading, along with technology firms Nvidia (3%), AMD (4%), Affirm Holdings (14%), Roblox (3%) and Sofi Technologies (12%), among others. Meanwhile, Dow Jones Industrial Average fell 0.44%, dragged down by a 7% drop in Disney shares after the company missed on both earnings and revenues and reported a slowdown in subscriber growth.

INVESTOR CONCERNS:

A lack of news over U.S. President Joe Biden's pick for Federal Reserve chair is introducing unpredictability for investors at a crucial time, as the central bank prepares to taper its asset purchases and start hiking rates. Many investors have been expecting that Fed Chair Jerome Powell, who was nominated for the role by President Donald Trump in 2017, would be renominated for another four-year stint. Still, it is not seen as a done deal. Biden is still weighing whether to keep Powell as chair or elevate Fed Governor Lael Brainard to the post, an administration official said on Wednesday.

Online betting website PredictIt gave Powell a 74% chance of being confirmed by the U.S. Senate as of Thursday while the odds that Brainard would be nominated were 26%.Based on recent historical announcements, a pick should have been made by now. Prior announcements had come earlier in the calendar. Powell was nominated by Trump on Nov. 2, 2017, Janet Yellen, now U.S. Treasury Secretary, was nominated by President Barack Obama on Oct. 9, 2013 and Ben Bernanke was nominated by President George W. Bush on Oct. 25, 2005 and renominated on Aug. 25, 2009.

While the leadership of the U.S. central bank is always important to markets, Biden's decision takes on heightened significance this year as the Fed has announced plans to start tapering its $120 billion in monthly bond purchases. At the same time, the Fed is monitoring a historic surge of inflation as global supply chains remain disrupted by the coronavirus pandemic. Some investors have said they would like to keep the status quo to ensure predictability. Moreover, Powell's current term, due to run out in February 2022, has proven positive for risk assets, with the S&P gaining 74.5% since his appointment on Feb. 5, 2018 and hitting a series of new records in part helped by emergency measures the Fed launched in response to the coronavirus pandemic.

Brainard, who was nominated to the Fed board by former President Obama in 2014, is widely seen as more dovish, or favoring looser monetary policy, than Powell in part because of her push to retain super-easy monetary policy recovery. However, while more dovish policies may be better for riskier assets like stocks, investors have expressed caution about changing the horses at this point in the race to recover from the pandemic. Some thought that a change at the helm risked a misinterpretation of Fed policy and could increase volatility.

A change at the top would also have consequences for Wall Street regulation on a slew of issues from bank capital and fair lending to climate-change risks and cryptocurrencies. Over the past four years Brainard opposed many de-regulatory changes led by Vice Chair for Supervision Randal Quarles and backed by Powell, and many on Wall Street expect her to be much tougher on the industry if she gets the job.