U.S. inflation data released today showed a 0.2% month-over-month increase in the Consumer Price Index (CPI), bringing the year-over-year rise to 2.4%. This slightly exceeded expectations and has not deterred market speculation that the Federal Reserve will implement a 25 basis point rate cut in November.
Jobless claims surged last week, partly due to Hurricane Helene and layoffs at Boeing amid an ongoing strike. The market reacted with a drop in U.S. share futures, a weakening dollar, and a slight dip in Treasury yields. Nasdaq futures fell 0.6%, while S&P 500 futures dropped 0.4% following a record high the previous day.
Despite the inflation data being above forecasts, analysts believe it indicates that inflationary pressures may be easing. The U.S. 10-year Treasury yield remained flat at 4.07%, after peaking earlier in the week. The dollar declined 0.1% against a basket of major currencies, with a notable drop of 0.6% against the yen.
In Europe, attention is shifting to France, where the government is set to unveil its 2025 budget, which includes significant tax hikes and spending cuts to address a growing fiscal deficit. Meanwhile, Chinese markets showed volatility, with the central bank initiating a 500 billion yuan facility to stimulate capital markets.