LIVE MARKETS-S&P 500 futures strengthen slightly, yields fall, after in-line CPI

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S&P 500 FUTURES STRENGTHEN SLIGHTLY, YIELDS FALL, AFTER IN-LINE CPI

The main U.S. equity index futures are little changed after the release of the latest data on U.S. consumer prices. E-mini S&P 500 futures EScv1 are now up around 0.1% vs a loss of around 0.2% just before the numbers came out.

The October headline CPI readings on a month-over-month and year-over-year basis were both came in as expected. The month-over-month and year-over-year core prints were also in-line with the Reuters Poll numbers:

According to the CME's FedWatch Tool, the probability that the FOMC cuts rates 25 basis points at its Dec. 17-18 policy meeting has risen to 79% from 59% just before the data came out. There is now around an 21% chance the Fed leaves rates unchanged vs 41% just before the numbers were released.

Looking into early 2025, at the Jan. 28-29 meeting there is a bias for rates to be in the 4.25%-4.50% area vs the current target rate of 4.50%-4.75%. Conviction in this outcome has increased to slightly around 60% from 54% since the data came out.

The U.S. 10-Year Treasury yield US10YT=RR is now around 4.38% vs 4.43% just before the data was released. The yield ended at 4.433% on Tuesday.

A majority of S&P 500 sector SPDR ETFs are higher ahead of the open. Consumer discretionary XLY.P, up about 1%, is posting the biggest rise. Communication services XLC.P, off about 0.4%, is the biggest loser.

The KBW regional banking ETF KRE.P is up >1%.

Regarding the data, Brian Jacobsen, chief economist at Annex Wealth Management, in Menomonee Falls, Wisconsin, said:

"The numbers came in consistent with expectations, but under the hood there are signs of further improvement ahead. Durable goods prices are down 2.5% year-over-year. Nondurables are down 0.5%. Services inflation is still significantly positive, but it’s not accelerating anymore."

Jacobsen added, "The inflation risks on the horizon from possible tariffs, deficits, or immigration changes are nebulous and uncertain enough to not be a major worry until we get more details about what might happen."

Here is a premarket snapshot from around 0900 EDT (1300 GMT):

(Terence Gabriel, Chuck Mikolajczak)

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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:

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