1. U.S. stocks rose on positive inflation data, enhancing Fed rate cut confidence. 2. CME data shows a 94% chance of a rate cut by the Fed next month. 3. Bank and airline stocks performed well in anticipation of lower borrowing costs. 4. Inflation remains above the Fed's 2% target, particularly in services. 5. Long-term Treasury yields rose slightly, impacting overall borrowing costs.
The anticipation of rate cuts typically supports equity markets, benefitting CME with increased trading volume and market activity, similar to past Fed easing cycles that saw heightened trading in futures and options.
High likelihood of impact as CME is directly involved in derivatives trading and interest rate futures, responding to anticipated policy changes.
The immediate reaction is due to upcoming Fed meetings, where rate cuts may be decided, following historical patterns of rapid initial market reactions to Fed decisions.