US Futures Climb on Fed Rate Cut Optimism

US index futures edged higher on August 13 as investors grew increasingly confident that the US Federal Reserve could lower interest rates as early as next month. The optimism followed lower-than-expected inflation data, which pointed to easing price pressures in the economy.

In early US trading, Nasdaq-100 E-mini futures rose 0.23%, while S&P 500 futures gained around 0.18%. Dow Jones futures were up 0.3% shortly before the opening bell.

Inflation Data Sparks Policy Shift Expectations

The rally in futures came after the July Consumer Price Index (CPI) showed inflation at 2.7% year-on-year, coming in below forecasts. This reinforced hopes that the Fed could act sooner to ease monetary policy.

Market expectations for a rate cut have surged. According to a poll, there is now a 98% probability of a 25 basis point cut in September, up from 88.8% just a day earlier. Some institutions, including UBS, are even forecasting a full percentage point of easing starting next month.

Also Read: Nifty, Sensex Surge on Positive Economic Data and Rate Cut Expectations

Volatility Falls, Banks Gain

Investor sentiment appeared to strengthen, with the CBOE Volatility Index (VIX) dropping to its lowest levels since January. Banking shares also found support from a steeper yield curve, as the widening gap between long- and short-term interest rates often benefits lenders.

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