LIVE MARKETS-U.S. stock futures rally with cooler-than-expected CPI data

Updates with US CPI data, premarket action

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

U.S. STOCK FUTURES RALLY WITH COOLER-THAN-EXPECTED CPI DATAThe main U.S. equity index futures are higher, while the U.S. 10-year Treasury yield is little changed, after the release of the latest data on U.S. consumer prices, which came in slightly below estimates.

E-mini S&P 500 futures EScv1 are now up about 0.6% vs a gain of around 0.3% just before the numbers came out.

September headline CPI month-over-month and year-over-year came in below estimates, as did the core month-over-month and year-over-year readings.

According to the CME's FedWatch Tool, the probability that the Federal Reserve delivers a 25 basis point rate cut at next week's October 28-29 FOMC meeting is now around 99% vs 97% just before the data was released. The chance the FOMC leaves its current target rate of 4.00%-4.25% unchanged is now around 1% vs 3% prior to the numbers.

Looking further out into 2025, the market is also showing a stronger bias for a December rate cut. (Interest rate probabilities are pricing in about 50 basis points of cuts through year-end).

The U.S. 10-Year Treasury yield US10YT=RR is now around 3.99%. It was about 4.02% just before the numbers came out. The yield ended Thursday at 3.989%.

All 11 S&P 500 index .SPX sector SPDR ETFs are quoted higher in premarket trade. Tech XLK.P, up more than 1%, is posting the biggest gain.

The SPDR S&P regional banking ETF KRE.P is also trading up more than 1%.

Regarding the inflation data, Mona Mahajan, Head of Investment Strategy at Edward Jones in New York said:

"It's nice to see CPI come in a tick lower than expectations. It gives the Fed a little more cover to pursue the rate cutting path it outlined in September even with the lack of full labor market data."

Mahajan added "The Fed is on this path towards neutral and probably wants to get the Fed funds rate somewhere in the three and a half percent range over the next year or so."

"We're still above the Fed's 2% target. We still have to see fully the tariff impact work through goods inflation. But goods makes up about a third of the CPI basket, and two thirds is services inflation, and that continues to look like it's remaining contained. That'll help support the overall narrative.”

In terms of additional data on Friday, the October S&P Global Manufacturing PMI Flash, and Services PMI Flash are due at 9:45 a.m. Manufacturing is expected at 52.0 vs 52.0 last month, while Services is expected at 53.5 vs 54.2 last month.

The final read on October University of Michigan Sentiment is due at 10 a.m. It is expected at 55.0 which is unchanged vs the prior read.

Here is a premarket snapshot from around 8:53 a.m. ET:

(Terence Gabriel, Sinéad Carew)

*****

EARLIER ON LIVE MARKETS:

US CPI HAS POTENTIAL TO BE A NON-EVENT - ING CLICK HERE

DEBATE RAGING IN SOFTWARE SECTOR OVER AI'S FUTURE - MS CLICK HERE

HUNTING ‘ROACHES, FINDING REASSURANCE: BOFA RECAPS CREDIT CONFERENCE CLICK HERE

STOXX SUPPORTED BY POSITIVE RESULTS, US-CHINA MEETING CLICK HERE

BEFORE THE BELL: EYES ON EARNINGS, US-CHINA RELATIONS, DATA CLICK HERE

SPOTLIGHT ON CPI BEFORE APEC WHIRLWIND CLICK HERE