Morning Minutes

Inflation Continues To Impact Trading in Stocks and Bonds




US index futures had been trying to mount a comeback in the early hours of this morning but were unable to get very far relative to yesterday’s major US index declines of 4.0%-5.0% and have slipped back into the red following the release of more US inflation numbers.

The headline Producer Price Index came in slightly better than expected (8.7% vs street 8.8% and previous 9.8%), but core PPI (excluding food and energy) was worse than expected (7.3% vs street 7.1% and previous 7.6%). This continued the theme of high US inflation keeping pressure on the Fed to keep tightening monetary policy.

Speculation among investors that rate increases could potentially accelerate or continue for longer than previously thought has depressed bond prices and pushed up traded interest rates. The US 10-year treasury note yield is still testing its June high on the news trading near 3.45%.

Commodity action is mixed today. WTI crude oil is down 0.1% after US API crude oil inventories increased for a third straight week (6.0 mmbbls vs previous 3.6 mmbbls). US DOE oil inventories are due at 10:30 am EDT (street 0.8 mmbbls). Natural gas, meanwhile, is up 3.3%. In metals action, copper is down 0.8% and gold is steady.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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