Equities extend rally as inflation print lands below forecast
The AMN Composite closed up 1.4% in its strongest session in seven weeks, with rate-sensitive sectors leading.
- Headline inflation printed at 2.4% against a 2.7% consensus, the third consecutive downside surprise.
- The AMN Composite gained 1.4%; homebuilders and regional banks led, energy lagged.
- Rate futures now imply two cuts before year-end, up from one before the release.
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Global equities extended their rally on Thursday after headline inflation printed at 2.4% against a 2.7% consensus, the third consecutive downside surprise and the clearest evidence yet that the disinflation trend has resumed.
The AMN Composite closed up 1.4%, its strongest single session in seven weeks. Rate-sensitive sectors led throughout: homebuilders added 3.8% as a group and regional banks 2.9%, while energy finished marginally lower on softer crude.
Rate futures now imply two cuts before year-end, up from one immediately before the release. The two-year yield fell eleven basis points.
Positioning data suggests the move was amplified by short covering rather than fresh allocation, which several desks flagged as a reason to treat the size of the reaction cautiously.
Attention now turns to next week's labour report, which the same desks describe as the more consequential of the two prints.