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U.S. STOCK FUTURES SLIDE, YIELDS SURGE, AFTER HOT CPI

The main U.S. equity index futures are under pressure after the release of the latest data on U.S. consumer prices. E-mini S&P 500 futures EScv1 are now down around 1% vs roughly flat just before the numbers came out.

January headline CPI month-over-month and year-over-year came in hotter than expected. The month-over-month and year-over-year core prints were also above estimates:

According to the CME's FedWatch Tool, the probability that the Fed sits on its hands and leaves its current target rate of 4.25%-4.50% unchanged at its March 18-19 FOMC meeting is now around 98% vs 95% just before the data was released. The chance that the FOMC cuts rates by 25 basis points is now around 2% vs 5%.

Looking out further into 2025, the market is now showing a slight bias for one Fed 25 basis point rate cut to occur in October vs July just before the data.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.64%. It was around 4.53% just before the numbers came out. The yield ended Tuesday at 4.537%.

All S&P 500 index .SPX sector SPDR ETFs are quoted down in premarket trade. Real estate XLRE.P, off about 1.7%, is taking the biggest hit.

The SPDR S&P regional banking ETF KRE.P is down around ~2%.

Regarding the inflation data, Gene Goldman, chief investment officer at Cetera Investment Management, said, "Today's number came in much hotter than expected. This further affirms that the Fed won't be cutting rates any time soon."

Goldman added "this news is consistent with what Powell and all the other Fed speakers said yesterday, that we need to see lower inflation in order to cut rates."

In terms of market reactions, Goldman said, "bond yield are higher. Futures are down and the dollar is higher. All this things suggest the Fed isn't likely to cut rates any time soon."

Here is a premarket snapshot from around 0853 EST:

(Terence Gabriel, Sinéad Carew)

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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:

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"SHORT COVERING IS DONE... BUT DON'T FADE EUROPE YET" - CLICK HERE

RAFT OF POSITIVE EARNINGS KEEP STOXX SWEET - CLICK HERE

EUROPE BEFORE THE BELL: GAINS AHEAD ON SWEET EARNINGS, CPI LOOMS - CLICK HERE

MARKETS LOOK TO US CPI WITH ONE EYE ON TARIFFS - CLICK HERE