{"id":60578,"date":"2023-09-13T15:32:24","date_gmt":"2023-09-13T19:32:24","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/complicated-inflation-report-produces-wavering-u-s-stocks-keeps-higher-for-longer-theme-in-rates-intact\/"},"modified":"2023-09-13T15:32:27","modified_gmt":"2023-09-13T19:32:27","slug":"complicated-inflation-report-produces-wavering-u-s-stocks-keeps-higher-for-longer-theme-in-rates-intact","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=60578","title":{"rendered":"\u2018Complicated\u2019 inflation report produces wavering U.S. stocks, keeps higher-for-longer theme in rates intact"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002498857\" role=\"document\">\n<p>Investors were evaluating a less-than-straightforward take on U.S. inflation Wednesday, with August\u2019s consumer price index coming in close to or in line with expectations while providing reasons for the Federal Reserve to hike again by year-end.<\/p>\n<p>U.S. stocks<br \/>\n        DJIA<\/p>\n<p>        SPX<\/p>\n<p>        COMP<br \/>\n       were higher, though wavering, in New York afternoon trading as traders weighed the chances of another rate hike in November. Three-month through 1-year T-bill rates were up slightly, though 2- through 30-year Treasury yields slipped.  And the ICE U.S. Dollar Index<br \/>\n        DXY<span>,<\/span><br \/>\n       which moves according to the market\u2019s expectations for U.S. rates relative to the rest of the world, swung between gains and losses.<\/p>\n<div class=\"paywall\">\n<p>Rising gas prices in August had Wall Street anticipating higher headline inflation figures of 0.6% for last month and either 3.6% or 3.7% year-on-year ahead of Wednesday\u2019s session, and on that score August\u2019s CPI report met expectations. The as-expected headline readings appeared to offer some comfort to many investors, even though the monthly gain was the biggest increase in 14 months and the annual rate jumped versus the prior two months. <\/p>\n<p>Still, Ed Moya, a senior market analyst for the Americas at OANDA Corp. in New York, said \u201cthis was a complicated inflation report\u201d and price gains are failing to ease by enough for the central bank to abandon its hawkish stance. Core readings which matter most to Fed policy makers came in a bit above expectations at 0.3% for last month, driven partly by a jump in airline fares, as the annual core rate dipped to 4.3% from 4.7% previously. According to Moya, \u201cinflation will likely still be running well above the Fed\u2019s 2% target for the rest of the year.\u201d<\/p>\n<p>\u201cToday\u2019s uptick in CPI could slightly increase the likelihood of a November interest rate hike and potentially delay the timing of any rate cuts until deeper into 2024,\u201d said Joe Tuckey, head of FX analysis at London-based Argentex Group, a provider of currency risk-management and payment services. <\/p>\n<p>As of Wednesday afternoon, however, August\u2019s CPI wasn\u2019t putting much of a dent in expectations for fed funds futures traders. They see a 97% likelihood of no rate hike next Wednesday, which would keep the fed funds rate at between 5.25%-5.5%, and a more-than-50% chance of the same in November and December, according to the CME Fed Tool. They also continued to price in the likelihood of no rate cuts through the early part of 2024.<\/p>\n<p>While August\u2019s CPI report failed to move the needle in stocks, the dollar, or fed funds futures, there was one corner of the financial market where the data did make more a difference: Traders of derivatives-like instruments known as fixings now foresee five more 3%-plus annual headline CPI readings starting in September, after adjusting their expectations to include January. <\/p>\n<p>If those expectations play out, that would bring the total number of 3%-plus readings to six months, including August\u2019s data, and produce a scenario that investors may not be entirely prepared for \u2014 the possibility that headline inflation doesn\u2019t meaningfully budge from current levels soon.<\/p>\n<p><strong>Read:<\/strong><strong> <\/strong>Why financial markets may be unprepared for a fourth-quarter \u2018inflation surprise\u2019<\/p>\n<p>Central bankers care more about less-volatile core readings, but pay attention to headline CPI figures because of their potential to affect household expectations. <\/p>\n<p>\u201cWhile these numbers do not change our, and the market\u2019s, expectations that the Fed will hold the target fed funds rate unchanged at the September meeting, the slightly stronger number can influence the tone of the press conference and Summary of Economic Projections,\u201d said Greg Wilensky, head of U.S. fixed income at Denver-based Janus Henderson Investors, which manages $322.1 billion in assets. <\/p>\n<p>\u201cWe continue to expect some reduction in the number of participants projecting further hikes, but probably not enough to move the median projection of one more rate hike,\u201d Wilensky said in an email.\u00a0\u201cThat said, we believe that we have likely seen the last rate hike for this cycle, as the economic data that the Fed will see over the coming months will keep them on hold and allow the impact of 5.25% of prior hikes to slow the economy and inflation.\u201d<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/complicated-inflation-report-produces-wavering-u-s-stocks-keeps-higher-for-longer-theme-in-rates-intact-de68552e?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Investors were evaluating a less-than-straightforward take on U.S. inflation Wednesday, with August\u2019s consumer price index coming in close to or in line with expectations while providing reasons for the Federal Reserve to hike again by year-end. U.S. stocks DJIA SPX COMP were higher, though wavering, in New York afternoon trading as traders weighed the chances [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":60579,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-60578","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>\u2018Complicated\u2019 inflation report produces wavering U.S. stocks, keeps higher-for-longer theme in rates intact | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Investors were evaluating a less-than-straightforward take on U.S. inflation Wednesday, with August\u2019s consumer price index coming in close to or in line\" 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