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Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More
NEW YORK (Reuters) -Investors scrambled to shift their positioning on Wednesday following a closely-watched debate between Republican Donald Trump and Democratic Vice President Kamala Harris, as betting markets swung in Harris’ favor after the event.Shares of Trump Media & Technology Group, the company that owns the Truth Social, slumped around 14% in premarket trading, while solar stocks rallied. The dollar edged lower against Asian currencies following the debate but rebounded after U.S. consumer price data. U.S. cryptocurrency shares fell in premarket trading, while bitcoin was off around 1.5%.In a combative debate late Tuesday, Trump and Harris clashed over everything from the economy to immigration and Trump’s legal woes, as each sought a campaign-altering moment in what has been a closely-fought race. Their exchanges left investors with few new details on issues that could sway markets, including tariffs, taxes and regulation. But online prediction markets showed bets on a stronger likelihood of a Harris win in November: Harris’ odds in PredictIt’s 2024 presidential general election market improved to 55 cents from 53 cents before the debate, while Trump’s odds slipped to 47 cents from 52 cents. There is a “general view that Harris won the debate,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore. “It’s obviously not a slam dunk for Harris, but the chances of a Trump victory have slipped a bit.”The U.S. dollar was recently down 0.2% against a basket of currencies including the euro and Japanese yen. Stock futures were down around 0.3%, with investors awaiting consumer price data. U.S.-listed shares of solar companies, seen as benefiting from a Harris win, rose between 2.2% and 7.2% in premarket trading.At the same time, investors hammered the shares of Trump Media & Technology Group, which have been popular among retail traders and sensitive to the former president’s chances of a win in the 2024 election.While the presidential race is very much on investors’ minds, political concerns have lately coalesced with more immediate market catalysts, including worries over a potentially softening U.S. economy and uncertainty over how deeply the Fed will need to cut interest rates, investors said. The S&P 500 notched its worst weekly percentage loss since March 2023 last week after a second-straight underwhelming jobs report, though the index is still up nearly 15% this year.Still, some investors believe even a small shift in perceptions of the candidates could prove significant in a contest that could come down to tens of thousands of votes in a handful of states. The two candidates are effectively tied in the seven battleground states likely to decide the election, according to polling averages compiled by the New York Times.“The US Presidential debate achieved its goal by providing a decisive edge to one of the candidates in what has been an exceptionally close race,” said Charu Chanana, Head of FX Strategy and Global Market Strategist at Saxo. “Crypto and energy stocks might face headwinds as market sentiment adjusts to the shifting political dynamics.”Trump has positioned himself as a pro-cryptocurrency candidate.TAXES AND TARIFFS Trump has promised lower corporate taxes and a tougher stance on trade and tariffs. He has also said a strong dollar hurts the U.S., though some analysts believe his policies could spur inflation and eventually buoy the currency.Harris last month outlined plans to raise the corporate tax rate to 28% from 21%, a proposal that some on Wall Street believe could hurt corporate profits. On Tuesday night, Harris attacked Trump’s intention to impose high tariffs on foreign goods – a proposal she has likened to a sales tax on the middle class – while touting her plan to offer tax benefits to families and small businesses.Trump defended his tariffs proposal and said they would not lead to higher prices for Americans.The Chinese yuan, which had come under pressure in the U.S.-China trade war during Trump’s term, edged up against the dollar in early Wednesday trading. Trump also criticized Harris for the persistent inflation during the Biden administration’s term. Inflation, he said, “has been a disaster for people, for the middle class, for every class.”However, economic policies could be up in the air for a while longer. “There wasn’t much substantive discussion of policy,” Carson Group’s Varghese said. “Neither candidate advocated for vastly different economic policies than currently in place. Ultimately, a lot of economic policies that we see implemented next year will depend on the makeup of the Senate and the House.” More
The consumer price index increased 0.2% last month after climbing 0.2% in July, the Labor Department’s Bureau of Labor Statistics said on Wednesday. In the 12 months through August, the CPI advanced 2.5%. That was the smallest year-on-year rise since February 2021 and followed a 2.9% increase in July.Economists polled by Reuters had forecast the CPI gaining 0.2% and rising 2.6% year-on-year. Though inflation remains above the U.S. central bank’s 2% target, it has slowed considerably, allowing policymakers to focus more on the labor market in their quest to sustain the economic expansion. Government data last week showed nonfarm payrolls increasing below expectations in August but the unemployment rate falling to 4.2% from near a three-year high of 4.3% in July, reducing the odds of a 50 basis point rate cut and boosting the chances of a quarter-point reduction.The labor is cooling amid a significant moderation in hiring, reducing the risks of inflation reigniting. Early on Wednesday, financial markets saw a roughly 29% probability of a 50 basis points rate cut at the Fed’s Sept. 17-18 policy meeting, according to CME Group’s (NASDAQ:CME) FedWatch Tool. The odds of a quarter-point rate reduction were around 71%.The central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range for a year, having raised it by 525 basis points in 2022 and 2023.Annual consumer price growth has slowed considerably from a peak of 9.1% in June 2022 as higher borrowing costs curb demand.Excluding the volatile food and energy components, the CPI climbed 0.3% in August after rising 0.2% in July. In the 12 months through August, the so-called core CPI increased 3.2%. That followed a 3.2% gain in July. Some economists cautioned that lingering stickiness in core inflation argued against a half-point rate cut next Wednesday. More
Prices increased as expected in August while the annual inflation rate declined to its lowest level since February 2021, according to a Labor Department report Wednesday that sets the stage for an expected quarter percentage point rate cut from the Federal Reserve in a week.
The consumer price index, a broad measure of goods and services costs across the U.S. economy, increased 0.2% for the month, in line with the Dow Jones consensus, the Bureau of Labor Statistics reported.
That put the 12-month inflation rate at 2.5%, down 0.4 percentage point from the July level and compared to the estimate for 2.6%.
However, core CPI, which excludes volatile food and energy prices, increased 0.3% for the month, slightly higher than the 0.2% estimate. The 12-month core inflation rate was 3.2%, in line with the forecast.
While the numbers showed that inflation slowly continued to moderate, housing-related costs remain an issue. The shelter component of CPI, which has about a one-third weighting in the index, increased 0.5%, accounting for much of the increase in the all-items measure. The shelter index was up 5.2% year over year.
Food prices rose just 0.1%, while energy costs slid 0.8%.
Elsewhere in the report, used vehicle prices decreased 1%, medical care services declined 0.1% and apparel prices increased 0.3%.
Stock market futures moved lower following the report though Treasury yields spiked.
In the fed funds futures market, traders priced in an 85% chance that the Federal Open Market Committee will approve a quarter percentage point, or 25 basis point, interest rate reduction when its meeting concludes Sept. 18, according to the CME Group”s FedWatch measure.
This is breaking news. Please check back for updates. More
(Reuters) – U.S. central bankers will likely start a series of interest-rate cuts next week with a quarter-of-a-percentage point reduction, traders bet on Wednesday, as government data showed inflation cooled in August from a year earlier, but a measure of underlying inflation remained sticky. Traders now see just a 15% chance of a bigger half-point rate cut at the Fed’s Sept 17-18 policysetting meeting, down from about 29% before the report, after government data showed the consumer price index rose 2.5% from a year earlier, but excluding volatile food and energy prices it was up 3.2%. More
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