Premarket: Global stocks edge higher, U.S. dollar sags eyeing Fed pause

Overnight, the much-watched U.S. CPI report showed prices barely rose in May, with just a 0.1% increase from the prior month. On an annual basis,That has crystallized traders’ views that the Fed is unlikely to hike rates later on Wednesday. They now see more than a 90% chance of the bank staying put.

“Having already flagged the possibility of a pause I think it’s unlikely that would veer off course at this particular juncture,” said Richard McGuire, head of rates strategy at Rabobank in London. Market pricing suggests a pause is all but certain, but traders are also bracing for the possibility of a hawkish surprise, with a 60% probability of a 25 basis-point hike priced in by July.The benchmark 10-year yield was last down 3 basis points to 3.81% after hitting the highest in 2-1/2 weeks on Tuesday.

Chinese blue chips marked the fifth straight session of gains on hopes for more economic stimulus, which could come on Thursday when China’s central bank is expected to cut rates on medium-term policy loans, following a short-term lending rate cut on Tuesday.In the UK, where data showing a rapid pickup in UK wage growth on Tuesday has prompted traders to raise their bets on Bank of England rate hikes, sterling touched a fresh one-month high of $1.2638, boosted by the rate hike bets.

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