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US inflation slips to 8.3% but eases less than expected, plunging Nasdaq 100 as yields soar -by Ecork

Key inflation points in the US:

  • The US Consumer Price Index for the month of April rose 0.3% based on seasonally rate and 8.3% in the last 12 monthsSlightly above expectations
  • The precursor to core inflation is 0.6% per month and 6.2% from the previous year, also topping Forecasting
  • Nasdaq 100 futures erase gains and plunge into negative territory, data indicates Inflation struggles to decline materially

Most Read: S&P 500, Nasdaq 100 forecast – US inflation data to create or break market spirit

Inflation in the United States eased last month on an annual basis, but remained at multiple levels.Highest decade levels and more Data released by the Labor Department on Wednesday showed four times above the Federal Reserve’s 2% target.

According to the agency’s latest report, the consumer price index, which measures a comprehensive range of goods and services, grew by 0.3% in April after rising by 1.2% in March, raising the 12-month reading to 8.3% from 8.5%, a sign that it reached Inflationary pressures peaked at the end of the first quarter, but still struggled to cool materially. Analysts in a Bloomberg News poll expected the CPI to rise 0.2% month over month and 8.1% year over year.

Source: DailyFX

Focusing on the monthly drivers of the headline figure, food prices rose 0.9%, in line with the pace of recent increases in this category. Meanwhile, energy costs fell 2.7% after posting an 11% gain in March due to higher oil prices following the Russian invasion of Ukraine. This is a positive development, as it indicates that the worst of the commodity market may be over.

Excluding food and energy, the so-called base CPI, which tends to reduce temporary noise and reflect long-term trends in the economy, advanced 0.6% on a seasonally adjusted basis and 6.2% from a year ago. The slowdown in the annual figure, down from 6.5%, appears to confirm the theory that the core metric also reached its highest point in March.

CPI components

Source: US Bureau of Labor Statistics

In terms of the monthly contributors to the core index, the shelter index rose 0.5%, matching the increase of the previous two months, amid tightness in the rental market. Meanwhile, transportation remained hot and jumped 3.1%, reflecting the rotation of household demand towards service consumption. In contrast, used cars and trucks continued to roll, dropping 0.4% after declining 3.8% in March amid sluggish demand and lower prices for durable goods.

With inflation decelerating but not declining materially, it is not certain that we have reached the peak of the tightening of central bank policy expectations. Against this background, yields may continue to re-price higher amid expectations of a larger tightening response. This scenario mayo Exacerbating fears that the Fed’s lifting cycle will lead to a recession and undermine Sentiment and the complexity of the stock market recovery.

Immediately after the CPI numbers crossed the wires, US Treasury yields jumped, sending Nasdaq 100 futures contracts to erase all pre-market gains and plunge more than 1% into negative territory. Federal Reserve officials They indicated that they were in favor of raising rates for front-loading in half-percentage point increments, but showed little appetite for larger adjustments. However, in the face of persistent inflation, the bank may eventually use 75 basis points of the super-highs in upcoming meetings in a move to bring monetary policy to a neutral position faster. This poses a significant risk to the stock.

Nasdaq 100 futures contracts

Nasdaq 100 chart created using TradingView

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— By Diego Coleman, Market Strategist, DailyFX

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