U.S. stock futures rose and shorter-dated Treasurys strengthened after U.S. inflation data soothed investor concerns that the Federal Reserve would hike rates in October.

Core PCE data--the Fed's favored inflation gauge--rose by 3% on year in August, compared to market expectations of 3.3%. The cooler-than-expected print prompted a cut in investors' expectations for an October hike. Markets price around a 60% likelihood the Fed will hold rates steady next month, according to LSEG.

U.S. stock indexes responded positively to the print. After trading flat earlier in the morning, futures for Dow Jones Industrial Average and the S&P 500 rose by 0.3%, as investors hope to close out a volatile quarter in the green. Nasdaq futures also added 0.2%.

The short end of the yield curve also reacted sharply. Two-year yields dropped by 2.7 basis points to 4.856%, while 10-year yields were steady at around 5.240%. Thirty-year yields continued to trade at multidecade highs, however, rising by another 1.2 basis points to 5.583%.

The inflation print added to downward pressure on shorter-dated yields, after dovish comments from influential Fed policymaker John Williams prompted an earlier tempering of rate hike expectations.

Meanwhile, oil prices edged higher despite signs that Middle East crude exports are recovering toward prewar levels, as the United Kingdom Maritime Trade Operations reported an attack on a tanker in the Strait of Hormuz. Most-traded Brent crude contracts for December delivery rose by 1.7% to $87.82 a barrel.

Asia stocks broadly strengthened, with Japan's Nikkei Stock Average gaining 3%, while the Europe-wide Stoxx 600 was flat.

The dollar slipped on the inflation print, while bitcoin jumped back above $85,000. Gold recovered back above $4,200 a troy ounce in New York.

For equity markets, earnings from chip maker Micron after the close will help shape sentiment around artificial-intelligence investments.