U.S. Futures Rise 0.1% as Kospi Plunges 7% on Diverging Market Mood

Q: With inflation dropping sharply, why does the Federal Reserve still project more interest rate hikes for this year?

The Fed still signals possible rate hikes because one soft inflation stretch is not enough to convince policymakers that price pressures are durably headed back to 2%. Recent CPI and PPI readings were cooler, but the Fed focuses heavily on PCE inflation, especially core PCE, and those measures remain above target. In the latest data cited around the June meeting, overall PCE was about 4.1% year over year and core PCE about 3.4%, still well above the Fed’s goal. Officials have also raised their near-term inflation forecasts, reflecting concern that inflation could stay sticky. The labor market is another reason. Unemployment around 4.2% and low jobless claims suggest the economy is still resilient enough to absorb tighter policy. As long as hiring and wages remain relatively firm, the Fed has room to keep policy restrictive without seeing an immediate need to ease. Policymakers are also worried about upside risks that could reverse recent progress. Higher energy prices linked to Middle East tensions, tariff-related cost pressures, and strong demand tied to AI and technology investment all threaten to keep inflation elevated. Fed officials have explicitly warned that one favorable month does not mean “mission accomplished.” In short, the Fed’s projections reflect caution: inflation is cooling, but it is still above target, the economy is not weak enough to force a pivot, and several supply- and demand-side risks could push prices back up.

2 articles · Updated · CNBC · Jul 15

Dow, S&P 500 and Nasdaq 100 futures each added 0.1% early Thursday after Wall Street extended gains, with the Dow up 0.3%, the S&P 500 0.4% and the Nasdaq 0.6% in regular trading.
Softer U.S. producer-price data, lower Treasury yields and solid financial-sector earnings fueled hopes inflation is cooling enough for the Federal Reserve to keep rates on hold.
South Korea's Kospi sank more than 7% and the Kosdaq fell 5%, while Japan's Nikkei dropped 3%; elsewhere in Asia, Hong Kong's Hang Seng rose 1.31% and China's CSI 300 slipped 0.55%.
U.S. investors next face retail sales and jobless claims at 8:30 a.m. ET, with UnitedHealth due before the bell and Netflix after the close as traders test whether growth is slowing without a hard downturn.