The US consumer inflation report brought marginal relief to markets, with annual headline and core rates ticking down as expected. However, the monthly core price gain was a touch hotter than forecast.
Market Reaction
Interest rate markets exhaled a bit after the CPI print, knocking the chances of a Federal Reserve rate hike next month just below 50%. Short-term Treasuries took some solace too, although that didn’t prevent the government having to sell 10-year debt at the highest yield in almost 20 years in yesterday’s auction.
The yield curve from two to 30 years steepened slightly. However, the next instalment of the overall inflation picture is due today, with the producer price report containing important components of the Fed’s favored PCE gauge, such as airfares.
Global Markets
Japan’s wholesale inflation picture looked concerning too, with annual rates still running above 7% in July amid big energy price gains. Monthly rates were softer than expected, though, and the jury is out on how the data could impact the Bank of Japan’s decision making.
World markets have slipped into the August doldrums, with major stock indexes little changed and Wall Street still near records after Wednesday’s earnings-day surges in AI-related firms CoreWeave and Super Micro.
Brent crude was still hovering under $90 per barrel on Thursday amid the ongoing impasse in the Gulf, albeit a tad down from the week’s peaks.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
