11 April 2024 | FXGT.com
CPI Report Triggers Decline in U.S. Stock Markets
- U.S. Inflation Exceeds Expectations: The Consumer Price Index (CPI) for March exceeded forecasts, climbing 0.4% from the previous month, which surpassed the anticipated 0.3% rise. This uptick pushed the annual inflation rate to 3.5%, marking a 0.3% increase from February’s figures.
- Core Inflation Also on the Rise: Stripping out the often-volatile categories of food and energy, the core CPI experienced a similar monthly increase of 0.4%, leading to an annual inflation rate of 3.8%. This development highlights concerns over the potential for sustained inflationary pressures.
- Equity Markets React Negatively: The revelation of higher-than-expected inflation led to declines in major U.S. stock indexes, with the Dow Jones, S&P 500, and Nasdaq 100 all closing lower.
- Treasury Yields Climb: Yields on U.S. Treasury notes surged, with the 10-year yield reaching levels not seen since mid-November, indicative of the market’s adjustment to inflation expectations.
- Shift in Interest Rate Projections: The latest inflation data has notably shifted market expectations regarding the Federal Reserve’s interest rate policy. Anticipations of rate cuts commencing in June have been pushed back, with the market now forecasting the initial rate reduction to occur in September. Furthermore, the total number of rate cuts expected for the year has been adjusted to two, signalling a more cautious outlook on monetary easing.
- Fed Rate Cut Expectations Diminish: The likelihood of a Federal Reserve rate cut in June has significantly decreased to approximately 17% from a previous 57% chance. Expectations for a July cut have also been adjusted to about 42%.
- Outlook for the Fed’s Policy Path: The persistence of inflation at levels higher than anticipated poses a challenge for the Federal Reserve, which may need to recalibrate its strategy for managing price stability. The coming months will be critical for observing inflation trends and the Fed’s responses, particularly in its upcoming meetings and policy announcements.
Help us improve this article.
Submit additional feedback
Disclaimer: Any material and information included herein are intended for general marketing purposes only and does not constitute investment advice or recommendation nor an invitation to acquire any financial instrument and/or be involved in any financial transaction. The investor is solely responsible for the risk of his investment decisions and if considers appropriate, he should seek relevant independent professional advice before making any decision. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. Please read full Non-Independent Investment Research Disclaimer
here.
Risk Disclosure: CFDs are complex instruments and carry a high level of risk of losing money. Read full Risk Disclosure
here .
