Market Steady as Fed Rate Cut Speculations Rise

Global stocks remained stable and government bond yields marginally fell after U.S. consumer price data for July aligned with expectations. Investors are now debating the Federal Reserve's potential rate cut size in September, fluctuating between a 25- or 50-basis-point reduction.

Global stocks held steady and government bond yields retreated slightly on Wednesday following data showing that U.S. consumer prices rose moderately in July, aligning with investor expectations. The data reinforced bets that the Federal Reserve might soon cut interest rates. However, the size of the Fed's first anticipated cut, which investors hope will happen in September, is still debated, with some expecting a 25-basis-point reduction and others a 50-basis-point cut.

The consumer price index increased by 0.2% last month after a 0.1% decline in June, although housing costs accelerated. "The market's somewhat disappointed reaction can be attributed to rising rents," said Gennadiy Goldberg, U.S. rates strategy head at TD Securities in New York. By 1823 GMT, the S&P 500 gained 0.24%, the Dow Jones rose 0.54%, while the Nasdaq Composite fell by 0.16%. The MSCI World Equity index reached its highest level in 12 days, up by 0.41%.

With the expectation of easing U.S. monetary policy, the benchmark 10-year Treasury yield fell to 3.8295%, while the two-year yield remained at 3.9537%. Europe's STOXX 600 rose by 0.5%, and London's FTSE 100 increased by 0.6% after data showed British inflation rose less than expected in July. Central banks globally have started to cut interest rates as inflation cools, with New Zealand's central bank cutting rates for the first time in four years on Wednesday, signaling further policy easing.