S&P 500 futures climbed 0.8% to 5,312.50, signaling strong U.S. equity momentum, while Japanese government bond yields reversed course, falling 12 basis points to 0.94% as inflation concerns eased. Markets responded to softer-than-expected CPI data from the U.S. and a dovish pivot in Bank of Japan commentary.
- S&P 500 futures rose 0.8% to 5,312.50
- 10-year U.S. Treasury yield fell to 4.21%
- Japanese 10-year yield dropped 12 bps to 0.94%
- Nikkei 225 gained 1.4% to 39,125.50
- Brent crude rose 0.7% to $84.60 per barrel
- Fed rate cut probability increased to 62% by Q3 2026
S&P 500 futures advanced 0.8% to 5,312.50, reflecting renewed investor confidence ahead of the U.S. equity open. The gain followed a broader rebound in global risk assets, with tech-heavy indices showing the strongest momentum. The rally was driven by a sharp decline in Treasury yields, with the 10-year U.S. benchmark dropping to 4.21% from 4.33% earlier in the session. Japanese government bonds (JGBs) posted a notable recovery, with the 10-year yield falling 12 basis points to 0.94%—its lowest level since December 2024. The move followed a revised headline CPI report from Japan showing core inflation at 2.3% year-on-year, below the 2.5% forecast, and a statement from Bank of Japan Governor Kazuo Ueda indicating a potential pause in tightening. This shift reduced expectations for immediate rate hikes. Equity markets across Asia also strengthened, with the Nikkei 225 rising 1.4% to 39,125.50. Meanwhile, the euro-dollar exchange rate stabilized near $1.0850 after earlier volatility, supported by mixed signals from the European Central Bank. Crude oil prices edged higher, with Brent crude trading at $84.60 per barrel, up 0.7% on renewed Middle East supply concerns. The rally in risk assets has implications for global monetary policy sentiment. A dovish shift in Japan and softer inflation data in the U.S. have reduced the urgency for further rate hikes, potentially extending the current low-rate environment. Financial markets are now pricing in a 62% probability of a rate cut by the Federal Reserve in Q3 2026, up from 48% last week.