U.S. stock futures experienced a slight dip, accompanied by an increase in Treasury yields and the value of the U.S. dollar on Wednesday following the release of the August inflation report. Although trading across markets was volatile, futures on the S&P 500 remained marginally lower after the data, decreasing gains made earlier in the morning.
Treasury Yields and Dollar Movement
Initially, the 10-year Treasury note’s yield surged, climbing up to 10 basis points to surpass 4.360%. However, it soon decreased its gains. It’s important to note that bond yields move inversely to prices. According to FactSet data, the euro showed an initial rise against the dollar and was trading at $1.075.
Inflation Report Highlights
The August inflation report revealed that broad consumer prices witnessed a 0.6% increase, aligning with the expectations of economists polled by The Wall Street Journal. On the other hand, another significant measure of prices known as “core prices” – which excludes volatile food and energy prices – experienced a larger jump of 0.3%. This exceeds the anticipated 0.2% rise.
Analysts promptly interpreted the data to be slightly hotter than expected, raising speculation on potential actions from the Federal Reserve. The pressure on them to implement at least one more interest-rate hike before the end of 2023 might intensify due to these findings.
Year-over-Year Increase in Consumer Prices
Year-over-year, consumer prices soared by 3.7%, marking the largest increase seen in 14 months.