US stock futures jump following inflation report
Newslooks- NEW YORK (AP)
Exhilaration is sweeping through Wall Street and financial markets worldwide Thursday after a report showed that inflation in the United States slowed last month by even more than expected.
Futures for U.S. stocks are surging 2.5% or more, indicating a big increase once trading begins, while prices jumped immediately for everything from gold to crude oil to stocks in Europe. Even bitcoin clawed back some of its steep plunge from prior days caused by the crypto industry’s latest crisis of confidence.
The most dramatic action may be happening in the bond market, where Treasury yields sank sharply as investors pared bets for how aggressive the Federal Reserve will be in hiking interest rates to get inflation under control.
Those big rate hikes by the Fed have been the main reason for Wall Street’s struggles this year and are threatening a recession.
The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell sharply to 3.93% from 4.10% late Wednesday. The two-year yield, which more closely tracks expectations for Fed action, dropped to 4.37% from 4.58%.
All the moves stemmed from a U.S. government report showing that inflation slowed to 7.7% last month from 8.2% in September. It’s the fourth straight month of moderation since inflation hit a peak of 9.1% in June, and it was an even better reading than the 8% that economists were expecting.
Perhaps more importantly, inflation also slowed more than expected after ignoring the effects of food and energy prices. That’s the measure that the Fed pays closer attention to. So did inflation between September and October.
“The month-of-month rate of inflation is much more informative,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “On that measure, inflation is still high, but not scary high.”
Slower inflation could keep the Fed off the most aggressive path in raising interest rates. It’s already raised its key lending rate to a range of 3.75% to 4%, up from close to zero in March.
