Hotter US Inflation Lifts Yields and the Dollar

Hotter-than-expected US consumer prices are putting pressure on bonds this morning, driving Treasury yields and the US Dollar higher. Equity markets are mixed, with NASDAQ futures steady and Dow futures up 0.3%. Meanwhile, Crude Oil continues to climb as conflict in the Middle East persists.

US consumer price inflation accelerated to 3.7%, above the Street’s 3.6% forecast and the previous 3.4% reading. The US 10-year Treasury note yield has bounced towards 5.30%, while the 30-year yield has rebounded towards 5.60%. The US Dollar Index is up 0.4%, with the Euro down 0.5% and the Loonie down 0.3%.

Earnings from US Financials are mixed. BlackRock beat expectations ($15.93 vs Street $14.15), sending its shares up 3.9% premarket. Morgan Stanley also exceeded forecasts ($3.03 vs Street $2.92), while Bank of America disappointed ($0.91 vs Street $1.09), with its shares down 6.1% ahead of the opening bell.

China’s inflation readings also moved higher. Consumer price inflation rose to 0.9% from 0.8%, slightly below the Street’s 1.0% forecast, while producer price inflation accelerated to 5.0%, above expectations of 4.5% and the previous 3.8%. China’s trade surplus exceeded forecasts ($133.5B vs Street $118.1B), supported by stronger-than-expected export growth (36.3% vs Street 25.5%).

Overseas equity markets are holding relatively steady or advancing. In Asia, the Nikkei finished flat and the Hang Seng slipped 0.1%. In Europe, the DAX is up 0.7% and the FTSE is up 0.3%.

Crude Oil is up 1.2%, climbing above $95.00/bbl, while Brent Crude is steady near $105.00/bbl. Gasoline is down 0.5%, trading above $3.20/gallon. Gold is steady after slipping below $4,200/oz yesterday, Copper is up 0.9%, approaching $6.80/lb, and Silver is down 1.0%.

Earnings season continues Thursday with results from BNY Mellon* and Alcoa, followed by Travelers on Friday.

Shares of BNY Mellon are held in some portfolios managed by SIA Wealth Management.

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