Stocks Fall, Traded Interest Rates Jump, as US Inflation Accelerates

US index futures have dropped off a cliff in the minutes following the release of a hotter than expected US inflation report. Through the morning ahead of the news, the three main US index futures contracts had been flat but now are down 1.1%-1.5%.

Headline US Consumer Prices (3.5% vs street 3.4% and previous 3.2%), and US Core CPI (3.8% unchanged vs street 3.7%) both came in above expectations, indicating that inflation pressures are starting to build again not recede. This may put pressure on the Fed to keep interest rates higher for longer, or even potentially raise rates in future.

As a result, the US 10-year treasury note yield has jumped up close to 4.50%, its highest level since November. The US Dollar is also surging, with gains of 1.0% against the Australian Dollar, 0.4%-0.6% against the Canadian Dollar, Euro and Pound, and 0.25% against Gold. With this news undermining investor confidence and risk appetite, cryptocurrencies are also taking a hit with Bitcoin falling 1.7% and Ether dropping 2.5%.   

Overnight the Reserve Bank of New Zealand held its benchmark interest rate steady, but indicted that it is continuing its fight against high inflation even though its economy is struggling, continuing the “higher for longer” theme. Expectations for today’s Bank of Canada decision and statement, due at 9:45 am are similar, with investors looking for hints on whether the Bank is still considering an interest rate cut at some point.

Meanwhile, resource prices continue to rise with Copper and US Crude Oil up 0.5% and Natural Gas up 1.6% indicating that upward pressure on inflation from commodities may continue in the near term.

SIA Wealth In The Media:

Chief Market Strategist Colin Cieszynski appeared on BNN Bloomberg today where he spoke about SIA Wealth Management’s tactical investing strategy, relative strength in market sectors, and current trends in monetary policy.

It’s an interesting week for signaling if not for rate decisions: market strategist

Navigating rally in oil, copper

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