Short-Term Interest Rate (STIR) Futures Index Jumped Following Disappointing U.S. Inflation Report

According to today’s data published by the Labor Department, U.S. inflation remained stickier than expected in February, although some underlying indicators showed signs of progress in curbing price increases. Overall annual inflation came in at 3.2% last month, according to the freshly updated consumer price index (CPI), roughly in line with consensus estimate. However, core inflation, which excludes the volatile food and energy sub-indexes, was 3.8%, above expectations of 3.7% but below January's unexpected spike.

As a result, the bond market is failing to recover so far, with the U.S. 10-year Treasury yield at 4.1% as of now, more than double its level two years ago. Short-term interest rate (STIR) futures provide a centralized pool of market liquidity and provide a way to trade short-term fluctuations in money market interest rates. CME Group’s benchmark STIR index products include Eurodollar and Fed Funds futures, as well as alternative benchmark rate instruments: SOFR and SONIA futures.