: U.S. stock futures surge, Treasury yields slide after lowest inflation reading since August 2021

U.S. stock futures surged on Wednesday after the consumer-price index for June showed prices rose by the smallest amount since August 2021. Meanwhile, Treasury yields and the U.S. dollar declined as traders’ expectations for another interest-rate hike later this year diminished, according to the CME’s FedWatch tool. S&P 500 futures ES00 were up 35 points, or 0.8%, at 4507.25. Dow Jones Industrial Average futures YM00 rose by 189 points, or 0.6%, to 34653. Nasdaq 100 futures NQ00 were up 141 points, or 0.9%, to 15402. Treasury yields, particularly on the short end of the curve, came down in the wake of the data, with the 2-year yield of 14 basis points at 4.750%. The euro EURUSD rose 0.5% against the U.S. dollar to trade at $1.1061. Headline and core CPI declined 0.2% in June, lower than economists’ expectations of 0.3%. It marked the smallest monthly reading since August 2021, On a 12-month basis, core CPI, which excludes volatile food and energy prices, rose by 4.8%, lower than expectations for 5%. FedWatch shows traders see another Fed rate hike in July as a virtual certainty, with odds just shy of 90% as of Wednesday morning. However, chances of a second hike later this year have fallen.

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