Dollar jumps, stocks and bonds dented by hot US inflation data
SPY•US core CPI rose 0.3% in September from August, above the 0.2% forecast, while annual core inflation reached 2.6%. The dollar and Treasury yields rose, stock futures fell, and traders increased the implied chance of a Federal Reserve rate rise this month to about 47%.
1. Inflation exceeds forecasts
The Labor Department said core consumer prices rose 0.3% in September from August, compared with economists’ 0.2% forecast. Core CPI rose 2.6% year over year, above the 2.5% estimate, while headline inflation was 3.7%, above the 3.6% forecast.
2. Markets reprice rate outlook
The dollar rose 0.3% against a basket of currencies. The two-year Treasury yield climbed 7 basis points to 4.872%, and S&P 500 futures fell 0.25% while Nasdaq futures dropped 0.5%. Traders raised the implied likelihood of a Federal Reserve rate increase this month to about 47%, from around 20% before the data, and increased bets on another rise in December.
3. Other market moves
Brent crude rose 0.2% to nearly $106 a barrel, with sentiment also affected by concerns about potential energy-supply disruption after attacks on vessels in the Strait of Hormuz. Bank of America reported a third-quarter profit decline, while Morgan Stanley beat profit expectations; ASML shares rose 1.4% after upbeat results.
