S&P 500 futures red after hot CPI data pushes yields higher
SPY•US stock futures fell about 0.3% after September core CPI rose 0.3% month over month, above the 0.2% estimate, and annual headline inflation reached 3.7%. The 10-year Treasury yield climbed to around 5.33%, while traders raised the implied odds of an October rate hike to about 44%.
1. Inflation lifts rate expectations
US stock futures moved into negative territory Wednesday after a mostly hotter-than-expected September inflation report. E-mini S&P 500 futures fell about 0.3%, reversing an earlier gain of roughly 0.3%. Headline CPI rose 0.6% from August, in line with forecasts, while annual inflation was 3.7%, above the 3.6% estimate. Core CPI rose 0.3% month over month versus a 0.2% forecast, and the annual core reading was 2.6%, above the 2.5% estimate.
2. Yields and sectors react
The probability of the Federal Reserve leaving rates unchanged at its October 27-28 meeting fell to 56% from 78% before the report, while the implied chance of a 25-basis-point hike rose to about 44% from 22%. The 10-year Treasury yield climbed to around 5.33%, from roughly 5.19% just before the data and Tuesday’s close of 5.217%. Technology was the weakest S&P 500 sector in premarket trading, down about 1%, while energy gained roughly 0.8%; the Invesco PHLX Semiconductor ETF fell about 2%.
