US Treasury bonds are rising strongly as inflation data are below forecasts


US stock futures jumped up and Treasuries rose on Thursday after closely watched inflation data for October turned out to be cooler than expected.

Contracts tracking the S&P 500 benchmark from Wall Street increased 3.2 percent, while contracts that track the tech-savvy Nasdaq 100 increased by 4.1 percent.

In the federal government bond markets, the yield of 2-year treasury securities, that are particularly sensitive to changes in rates of interest, fell by 0.25 percentage points to 4.37%. The profitability of the 10-year Treasury fell by 0.22 percentage points to three.91 percent. Yields go down when prices go up.

The rebound in US markets got here after the US consumer price index for October reached 7.7%, the smallest 12-month increase since January and a pointy decline in annual inflation by 8.2%. in September. Economists forecasted an 8% increase.

The core CPI reading, which doesn’t include food and energy prices, was 6.3%. yr on yr, below expectations of 6.5 percent. and the September reading of 6.6 percent.

The lower-than-expected readings ease the pressure on the US Federal Reserve to take care of its policy of aggressive rate of interest hikes to combat inflation. The central bank made 4 more hikes of 0.75 percentage points this yr to decelerate rising price increases.

Fed chairman Jay Powell signaled earlier this month that the central bank would decelerate the pace of monetary tightening, but would reach a higher-than-expected end rate.

The most recent figures mean it “has been hard to disclaim that Fed medicine is working,” said Florian Ielpo, macro chief at Lombard Odier. The dollar fell immediately after the CPI report, falling 1.2%. against a basket of six pairs.

Traders are also assessing the upcoming results of the mid-term elections this week. The day after the polls closed, elections in lots of states had yet to be called, leaving control of each the Senate and House within the air. But analysts said the Republican Party’s performances to this point have already undermined pollsters’ predictions of a “red wave” in each legislatures.

In Asia, the Japanese Topix lost 0.7 percent on Thursday, Hong Kong’s Hang Seng index fell 1.7 percent, and the Chinese CSI index of 300 firms listed in Shanghai and Shenzhen fell 0.7 percent.

The European Stoxx 600 gained 2 percent in early afternoon trading, while the London-based FTSE gained 0.9 percent.

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