(News Bulletin 247) – Wall Street should open in the green on Friday morning, reassured by the publication of inflation figures which apparently remove the risk of overly aggressive monetary tightening.
Half an hour before the opening, the ‘futures’ contracts on the main New York indices advance from 0.5% to 1%, announcing a continuation of the rise of the last few days.
The Commerce Department reported this morning that the PCE price index excluding food and energy – the Fed’s preferred inflation measure – rose 4.6% in May, from 4.7% in April.
From an investor’s point of view, this sharper-than-expected slowdown in price growth confirms that the disinflation cycle is continuing and that the Fed’s monetary tightening cycle is nearing completion.
As an indication, traders are now counting with an 86.8% probability on a 25 basis point hike in Fed rates next month against an 89.3% probability before the publication of these figures.
Pre-opening data weighed on the 10-year Treasuries yield, which fell back to 3.82% after hitting a one-month high of 3.85% last night.
The dollar erased its recent gains against the euro in reaction to this statistic, bringing the single currency down to less than 1.13.
On the oil front, US light crude is regaining ground driven by the return of appetite for risky assets, with WTI posting a gain of 0.8% to 70.4 dollars.
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