October Rate Hike Odds Tumble on Softer Inflation Data

U.S. stocks opened higher on Wednesday after softer-than-expected inflation data was released by the Federal Reserve's preferred gauge, the personal consumption expenditures (PCE) price index.

The PCE price index ticked up 0.3% month-over-month and 3.4% year-over-year in August, compared to 0.1% and 3.4% in July, according to the U.S. Bureau of Economic Analysis.

This data comes at a time when U.S. Treasury yields have surged to multi-decade highs, sharply increasing borrowing costs due to oil-related inflationary concerns, worries over debt being issued by companies for artificial intelligence infrastructure buildouts, hawkish Fed signals, and ballooning U.S. fiscal debt.

The odds of another interest rate hike in October had risen since the September decision, but Tuesday's comments from New York Fed President John Williams, who said there was 'no need for urgency' in terms of more rate hikes, dented those odds further.