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U.S. equity futures edged higher Monday, while Treasury bond yields jumped to the highest levels in more than four months, as investors looked to navigate a challenging week on Wall Street that includes key inflation data and the start of the first-quarter earnings season.

Stocks rallied hard on Friday, lifting the S&P 500 more than 57 points on the session to take the benchmark’s year-to-date gain past 9.1%. The market move followed a stronger-than-expected March payrolls report that showed solid hiring with wage gains that were largely in line with Wall Street forecasts.

However, when set against the recent “higher for longer” messaging from Federal Reserve officials, the report has kept market bets for a June rate cut muted at around 46.1%, some 10 percentage points below month-ago levels, according to CME Group data.

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Treasury bond yields were also moving higher Friday but failed to halt the afternoon rally on Wall Street, as traders adjusted their near-term rate and growth forecasts.

Wednesday’s inflation report will provide details as to how, and to what extent, wages and other pressures are driving price pressures. Economists are looking for a modest easing in the closely tracked core CPI reading, which was last pegged at 3.8%.

Benchmark 10-year Treasury note yields added another 4 basis points in overnight trading to change hands at 4.441% heading into the start of the New York session, while 2-year notes were pegged 3 basis points higher at 4.781%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.07% higher at 104.366.

Apart from Wednesday’s CPI report, as well as a reading on factory gate inflation the following day, investors are also braced for the start of the first quarter earnings season, with around nine S&P 500 companies set to report this week. 

Analysts see collective S&P 500 profits rising by 5% from a year earlier to a share-weighted total of $457.4 billion. That figure is expected to improve to around $494.1 billon over the three months ending in June.

Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are indicating a 1 point opening bell bump, while those linked to the Dow Jones Industrial Average suggest a 22 point advance.

The tech-focused Nasdaq, which is up 8.24% for the year, is priced for an 11 point gain.

Tesla  (TSLA)  shares are leading movers in the premarket, rising 3.4% on volume of nearly half a million shares, following CEO Elon Musk’s announcement that the carmaker will unveil its robotaxi prototype in August.

More Economic Analysis:

• Bond markets tell Fed rate story that stocks still ignore
• February inflation surprises with modest uptick, but core pressures ease

Vanguard unveils bold interest rate forecast ahead of Fed meeting

In overseas markets, Europe’s Stoxx 600 was marked 0.22% higher in early Frankfurt trading, with investors eyeing the European Central Bank’s April policy meeting later this week, while Britain’s FTSE 100 added 0.12% in London.

Overnight in Asia, a weaker yen, tied in part to muted economic outlook data, helped the Nikkei 225 rise 0.91% in Tokyo while the regionwide MSCI ex-Japan index rose 0.16% into the close of trading.

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