U.S. stock futures dipped while Treasury yields and the U.S. dollar climbed Wednesday following the release of the August inflation report. Futures on the S&P 500 were marginally lower after the data, paring gains from earlier in the morning, although trading was volatile across markets. The yield on the 10-year Treasury note initially jerked higher, rising as much as 10 basis points to more than 4.360% before paring its gains. Bond yields move inversely to prices. The euro initially rose against the dollar to trade at $1.075 before turning lower, FactSet data showed. While a gauge of broad consumer prices showed an increase of 0.6% for August, just as economists polled by The Wall Street Journal had expected, another measure of so-called core prices, which excludes volatile food and energy prices, rose by 0.3%, a bigger jump than the 0.2% that had been expected. Analysts were quick to interpret the data as slightly hotter than expected. That could increase the pressure on the Federal Reserve to deliver at least one more interest-rate hike before the end of 2023, they said. “August saw a gain in core inflation, while increased gasoline prices helped push headline inflation even higher compared to the prior month. The Fed is likely to keep the federal funds rate unchanged at this month’s meeting, but today’s report keeps alive the potential for another interest rate hike in coming months,” said Phillip Neuhart, director of market and economic research at First Citizens Bank, in emailed commentary. Meanwhile, consumer prices rose 3.7% year-over-year, the biggest such increase in 14 months.
