CPI tops forecasts, stocks slide, yields rise
SPY•October U.S. headline CPI rose 0.4% month over month, above the 0.3% forecast, while core CPI rose 0.3%, above the 0.2% forecast. S&P 500 futures fell about 0.6% and the 10-year Treasury yield climbed to around 4.96%.
1. Inflation tops estimates
S&P 500 futures turned lower after October consumer prices rose more than economists expected. Headline CPI increased 0.4% month over month, compared with a 0.3% forecast, while core CPI rose 0.3%, versus expectations for 0.2%. The Bureau of Labor Statistics did not publish annual percentage-change figures with the release.
2. Rate expectations rise
Traders increased bets on further Federal Reserve tightening. The implied probability of a 50-basis-point rate hike at the Fed’s December 8-9 meeting rose from 0% to 15%, while the probability of a 25-basis-point increase fell from 99% to 85%. The 10-year Treasury yield climbed to around 4.96%, from about 4.90% just before the report and Monday’s close of 4.862%.
3. Premarket moves
S&P 500 futures were down about 0.6%, while Nasdaq 100 futures fell about 1%. Among S&P 500 sector ETFs, industrials were down 1.3% and healthcare was up about 0.4%; the Invesco PHLX Semiconductor ETF fell more than 2.5%.
