Stock Futures Slip as Treasury Yields Climb on Hotter Inflation Data

what happened

Stock futures fell and Treasury yields rose after US consumer price data for September came in hotter than economists expected. Consumer prices were up 3.7% from a year earlier, against the 3.6% forecast by economists surveyed by the Wall Street Journal. The report sharply raised bets on a Federal Reserve rate hike later this month: according to LSEG, the probability of a Fed hold dropped from 78% to about 47%.

Two-year Treasury yields climbed 13.15 basis points to 4.903%, while ten-year yields rose 9.1 basis points to 5.308%. Thirty-year yields traded near 5.610%. Dow Jones and S&P 500 futures gave back early gains and slipped 0.2% and 0.3%, while Nasdaq futures lost 0.6%. Micron and Intel shares fell 1.5% and 2.5% in premarket trading.

Front-month Brent crude for December delivery edged up 0.2% to $105.88 a barrel, despite Houthi attacks on a Saudi Aramco administrative building on Tuesday and an International Energy Agency forecast for a sharp drop in demand. New York gold futures lost 1% to fall back below $4,200 a troy ounce, and bitcoin slipped 0.8% to around $82,700.

why it matters

For markets, the key question is how a firmer price backdrop will affect the Fed's decision and borrowing costs. Investors are also turning their attention to Anthropic's expected pre-IPO investor day, where the company is set to disclose third-quarter earnings, and to results from Bank of America, Morgan Stanley and BlackRock, according to CNBC.

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