U.S. futures ticked higher on Wednesday as investors eagerly anticipated the latest Consumer Price Index data that is expected to be released later in the day.
Contracts on the S&P 500 advanced 0.2% during the morning session, while those on the Dow Jones Industrial Average gained 0.3%. Futures on the Nasdaq 100 remained relatively unchanged.
Switching focus to bonds, and the yield on 10-year Treasuries rose 3 basis points to 3.45%. The two-year Treasury yield also edged higher, advancing above 4%, while the Bloomberg Dollar Spot Index remained little changed.
Headline inflation is expected to show signs of cooling down, with the core inflation reading expected to slow down on both an annual and monthly basis. Based on this assumption, markets are expecting the Federal Reserve to deliver another rate hike in March before pausing its interest rate hikes during the following policy meeting.
“Markets have recently taken the view that the Fed needs to ensure stability in the financial system,” Russ Mould, investment director at AJ Bell stated. “However, the reason why rates have been going up so fast over the past 12 months is down to rising inflation, so today’s update will still matter to the Fed.”
