Futures Rise, Yields and Dollar Decline After July CPI Report

August 10, 2022 8:51 AM EDT
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The S&P 500 futures are up 1.7% in premarket Wednesday after the U.S. CPI data rose at a slower-than-expected pace. The Nasdaq 100 futures are up 2.3%.

U.S. inflation was 8.5% in July, according to the Labor Department, while analysts were looking for an 8.7% increase. On a monthly basis, prices were flat while economists were expecting the headline CPI to rise 0.2%.

Excluding food and energy, the core CPI gained 5.9% on a YoY basis and 0.3% compared to June, which is weaker than the consensus of 6.1% and 0.5%, respectively.

The dollar has now dropped to a one-month low with the EUR/USD up 1.2% to 1.0336. In the bonds market, the U.S. Treasury curve steepened as the front-end gained.

“It’s hard to call today’s CPI report anything but dovish… The market reaction to rally financial assets is pretty obvious, and 50 bps next month now looks like a more likely path for the Fed. Of course, there are still another payroll figure and inflation print to come, so nothing will be etched in stone,” said Cameron Crise, macro strategist at Bloomberg.

By Senad Karaahmetovic

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Standard & Poor's, Senad Karaahmetovic