Business Maverick: Stocks, futures rise as slower CPI curbs rate bets: markets wrap

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Softer-than-expected US inflation data has stoked speculation that the Federal Reserve could pivot to a shallower pace of interest-rate hikes.

Tech shares spurred a 1% climb in an Asian equity index amid gains in Hong Kong, South Korea and China. US and European futures rose after the S&P 500 hit a three-month high and the Nasdaq 100 pulled 20% above a June low.a warning from its central bank about inflation threats and a pledge to avoid massive stimulus.

US headline inflation was 8.5% in July, down from the 9.1% June advance that was the largest in four decades. That’s still high and Fed officials were quick to stress that more rate hikes are coming. They also signalled investors should rethink expectations of cuts next year to shore up economic growth.

“We still need to see a couple more monthly decreases in underlying inflation before the FOMC can start to think about pausing its tightening cycle,” Carol Kong, strategist at Commonwealth Bank of Australia, said on Bloomberg Television. “The market is still currently underestimating US inflation and how sticky it will be over the medium term.”he wants the Fed’s benchmark interest rate at 3.9% by the end of this year and at 4.4% by the end of 2023.

Chicago counterpart Charles Evans said inflation remains “unacceptably high” and that “we will be increasing rates the rest of this year and into next year”.“The easing of financial conditions likely annoys the Fed, and we should not be surprised to see Fed speakers continue to try to talk down the market and risk assets,” said Christian Hoffmann, portfolio manager at Thornburg Investment Management.

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Business Maverick: Stocks Roar as Wall Street Cheers CPI Surprise: Markets WrapStocks surged and bond yields sank as softer-than-expected inflation data fueled bets the Federal Reserve could pivot to a smaller pace of hikes -- a view taken with a grain of salt by market watchers saying officials may still be a long ways from achieving their goal.
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