US stock futures surged more than 3% and yields on Treasuries tumbled across the curve after data showed prices grew less than forecast last month, cementing optimism the Federal Reserve will slow the pace of rate increases.
(Bloomberg) — US stock futures surged more than 3% and yields on Treasuries tumbled across the curve after data showed prices grew less than forecast last month, cementing optimism the Federal Reserve will slow the pace of rate increases.
S&P 500 contracts jumped, Nasdaq 100 futures added more than 4% and the policy-sensitive two-year Treasury yield sank more than 15 basis points.
Fed officials have already indicated a downshift in the pace of rate hikes but have also stressed that borrowing costs will need to remain restrictive for some time until inflation come down meaningfully. Tuesday’s data, taken with the slower-than-projected CPI print in the prior month, would justify the Fed’s projected half-point move on Wednesday.
Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
Key events this week:
- FOMC rate decision and Fed Chair news conference, Wednesday
- China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday
- ECB rate decision and ECB President Lagarde briefing, Thursday
- Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday
- US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 2.5% as of 8:33 a.m. New York time
- Futures on the Nasdaq 100 rose 3.4%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The Stoxx Europe 600 rose 0.6%
- The MSCI World index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index fell 1%
- The euro rose 1% to $1.0640
- The British pound rose 1.1% to $1.2407
- The Japanese yen rose 1.7% to 135.39 per dollar
Cryptocurrencies
- Bitcoin rose 4% to $17,856.99
- Ether rose 4.6% to $1,333.7
Bonds
- The yield on 10-year Treasuries declined 17 basis points to 3.44%
- Germany’s 10-year yield declined seven basis points to 1.87%
- Britain’s 10-year yield was little changed at 3.20%
Commodities
- West Texas Intermediate crude rose 0.9% to $73.82 a barrel
- Gold futures rose 0.4% to $1,800.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar and Jason Scott.
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