(Bloomberg) – U.S. stock futures jumped and Treasuries rallied after data showed inflation had slowed over the past month, fueling bets that the Federal Reserve will hike rates just once more this year must.
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Contracts on the S&P 500 rose as much as 1% and two-year Treasury yields fell more than 10 basis points as the dollar fell against a basket of G-10 peers. Swap markets showed that the chances of the Fed raising rates have declined in May, while trading continued to suggest the central bank will cut later this year.
US consumer prices rose 0.1% in March, just below economists’ forecast of 0.2% and up 5% year-on-year. The closely-watched core CPI figure — which excludes food and energy — rose 0.4%, hitting the median estimate of 0.4%.
It’s a delicate balancing act for Fed officials juggling the need to curb rampant inflation and stabilize struggling banks.
“March inflation data confirms that the disinflationary process is intact but moving very slowly. Core CPI is still well above target,” said Lauren Goodwin, portfolio strategist at New York Life Investments. “The Fed would need to see core CPI slowing to accept that monetary policy has been tightened enough. Lacking that evidence today, we expect another 25 basis point hike in May before the Fed pauses.
Elsewhere, bitcoin reversed an early plunge and climbed back above $30,000 after hitting a 10-month high on Tuesday. Oil and gold surged higher.
In US premarket trading, Bed Bath & Beyond benefited from the retailer’s move to sell shares to secure liquidity.
Important events this week:
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Richmond Fed’s Thomas Barkin speaks Wednesday
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China trade Thursday
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US PPI, first jobless claim, Thursday
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US Retail Sales, Corporate Inventories, Industrial Production, University of Michigan Consumer Sentiment, Friday
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The big US banks JPMorgan Chase, Wells Fargo and Citigroup announce their results on Friday
The story goes on
Some of the key movements in the markets:
Shares
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S&P 500 futures were up 0.5% as of 9:05 a.m. New York time
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Nasdaq 100 futures up 0.7%
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Futures on the Dow Jones Industrial Average rose 0.4%
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The Stoxx Europe 600 rose 0.4%
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MSCI World Index up 0.2%
currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.5% to $1.0965
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The British pound rose 0.1% to $1.2441
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The Japanese yen rose 0.5% to 133.06 per dollar
cryptocurrencies
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Bitcoin rose 0.2% to $30,242.04
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Ether fell 0.2% to $1,890.39
Bind
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The 10-year government bond yield fell five basis points to 3.38%
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Germany’s 10-year yield was little changed at 2.31%
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The 10-year UK government bond yield fell three basis points to 3.51%
raw materials
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West Texas Intermediate crude rose 0.7% to $82.10 a barrel
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Gold futures were up 0.9% to $2,036.60 an ounce
This story was created with the support of Bloomberg Automation. Produced with the support of Bloomberg Automation.
–With assistance from Cecile Gutscher and Denitsa Tsekova.
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