Indexes Sharply Higher on Unch CPI Report
STOCK INDEX FUTURES
Stock index futures quickly advanced on news that the consumer price index for July was unchanged and on an annualized basis it increased 8.5% when a gain of 8.7% was anticipated.
Mortgage applications edged 0.2% higher in the first week of August, prompted by a 3.5% jump in refinancing while those to purchase a home declined 1.4%.
The August Atlanta Federal Reserve year-over-year business inflation expectations report will be released at 9:00. The July figure was 3.7%.
The 9:00 June wholesale inventories report is estimated to show a 1.9% increase.
The U.S. dollar came under pressure and other currencies advanced when the U.S. consumer price index report was released.
The technical aspects are turning neutral for the U.S. dollar.
The Swiss franc advanced to a four-month high due to a hawkish Swiss National Bank. There is speculation that policymakers are considering a 50 to 75 basis point rate hike at the central bank’s next policy meeting.
INTEREST RATE MARKET FUTURES
Futures advanced when the July U.S. consumer price index was released.
The Treasury will auction 10-year notes today.
Charles Evans of the Federal Reserve will speak at 10:00.
The inverted Treasury yield curve continues to flash warnings of economic risks.
According to financial futures markets, there is a 65.5% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 34.5% probability that the rate will increase by 75 basis points at the September 21 policy meeting.
Any indications that inflation has peaked could be enough for policymakers to ease back on aggressive monetary tightening.
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