Remy Blaire: And while it's lunchtime here in New York City, it is 11 a.m. over in Chicago at Cboe. Let's head on over to your FINTECH.TV correspondent, Mark Payton, who is live from the trading floor. Hey, Mark. Well, let's get caught up on the trading action at this noon hour here in New York. So given the fact that we are still looking at elevated levels for the equity markets on the heels of that inflation figure, tell us what you're paying attention to right now.
Mark Payton: Yeah. Good afternoon. So as we move through the trading day, the rebound is still holding up. The S&P 500 is up just over 1%, trying to snap that four-day losing streak here at Cboe. The VIX is hovering right around 15.75, dipping a little lower than that here and there, but definitely some movement and down close 10% today.
So even after that slightly warmer core inflation reading this morning, we're actually seeing quite a bit of fear come out of this market. The Russell 2000 is also bouncing back today. Futures are trading around 2917, up roughly 8/10 of a percent. Small caps were hit hard yesterday, and they tend to be more sensitive to the borrowing costs.
And that brings us to the ten-year Treasury yield. It's hovering right around 4.95. So it got as high as 4.99 earlier, coming within striking distance of that fearful five before backing off. So stocks are holding their gains. Volatility is falling in. Yields have moved away from the piper now. But this morning's inflation report has definitely changed the conversation around the Fed.
Remy Blaire: And of course, speaking of the Fed, we are counting down to next week's September Fed meeting. And Fed fund futures have jumped on the heels of that higher-than-expected core CPI figure. We are currently looking at an 87% chance of a rate hike next week, according to Fed Funds futures, but give us a sense of what market traders are expecting.
Mark Payton: Yeah, the probabilities have moved pretty dramatically following this morning's inflation report. So over on Poly Markets Fed rates dashboard, traders are now putting an 82% probability on a quarter-point rate hike next week, compared with just an 18% chance that the Fed leaves rates unchanged. And I think that tells you just how much the conversation has shifted.
We're not really talking about a rate cut anymore. The question for traders now is essentially hike or hold. Traditional interest rate markets are telling a very similar story, putting roughly an 85 to 86% probability on a quarter-point hike next week. That's slightly hotter. Monthly core CPI number certainly plays into this.
Core prices rose 3/10 of a percent in August, a little more than economists were expecting. So you've got prediction markets and traditional rate markets moving in the same direction. And with inflation still sticky and the ten-year sitting just below 5%, next Wednesday's Fed decision has suddenly become one of the biggest events on the calendar for Wall Street.
Remy Blaire: Yeah, indeed a lot of event risk ahead of the weekend. So Mark, appreciate your time and have a great weekend.
Mark Payton: Thank you.
