US Inflation Data Sends Stocks Higher, Yields Lower
Stocks on Wall Street rose on Wednesday, September 30, after softer-than-expected inflation data was released. This led to a decrease in expectations that the Federal Reserve will hike interest rates next month.
The 2-year US Treasury price increased, pushing the yield lower as investors reassess their bets on future rate hikes. The 10-year US yield, however, rose to its biggest monthly increase since 2022, despite the softer inflation data.
According to LSEG, the market was pricing in a roughly 65% chance that the Fed will keep rates steady next month, up from a 55% chance before the inflation release. The US Personal Consumption Expenditures Price Index rose by 0.3% on a monthly basis and by 3.4% year-on-year.
Oil prices also rose due to stalled US-Iran peace talks and tightening US fuel markets, with Brent November futures up 1% at $103.71 per barrel.