Stocks slide, dollar gains as US CPI sparks tightening fears

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NEW YORK/LONDON (Businesshala) – A gauge of global stock markets fell lower and the dollar built on earlier gains on Wednesday after US consumer inflation hit its highest level since 1990, amid concerns that Federal Reserve monetary policy Will tighten it sooner than expected.

FILE PHOTO: A trader works on the floor of the New York Stock Exchange (NYSE) on November 8, 2021 in New York City, US. Businesshala/Brendan McDermid

Another jump in the consumer price index in October bolstered the metal’s appeal as a hedge against inflation.

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The Labor Department said the CPI jumped 0.9% after climbing 0.4% in September, as the biggest gain in four months pushed the index’s annual growth to 6.2%. This was the biggest year-on-year increase since November 1990 and followed a 5.4% jump in September.

The US consumer price index rose 0.9% in October after rising 0.4% in September, gaining 6.2% in the 12 months through October, the biggest year-over-year advance since November 1990. Economists surveyed by Businesshala had projected the overall CPI to grow at 0.6% and the core CPI at 0.4%.

“It is clear that the rate of inflation and the continuation of high inflation are much higher than policymakers and markets expect,” said Joseph LaVorgna, chief economist for Americas at Natixis in New York.

Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, said the Fed is now behind the curve. “They may now be forced to raise rates sooner than later,” he said.

MSCI’s all-country world index dropped 0.21%, while the broader pan-European FTSEurofirst 300 index gained 0.28%.

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On Wall Street, the Dow Jones Industrial Average fell 0.11%, the S&P 500 lost 0.15% and the Nasdaq Composite fell 0.44%.

The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.605% to 94.577.

The euro was down 0.66% at $1.1515, while the yen was trading up 0.91% at $113.8800.

Yield on 10-year Treasury Inflation Protected Securities reduced to -1.243% and 30-year yield on Both records slipped to -0.607% in morning trade.

The 10-year TIPS breakeven rate stood at 2.72%, indicating that the market sees inflation at an average of 2.7% per annum for the next decade.

The benchmark 10-year US Treasury yield rose 6.6 basis points to 1.5153% after touching a six-week low of 1.4150% on Tuesday.

Euro zone bond yields also ticked up, with Germany’s 10-year yield, the benchmark for the bloc, touching 3.4 basis points at -0.259%, above a seven-week low of -0.299% on Tuesday. [GVD/EUR]

Oil prices tumbled after US crude stocks rose marginally, a day after an industry report suggested inventories had hardened.

Brent crude fell $0.22 to $84.56 a barrel. US crude was trading at $ 83.71 per barrel, down by $ 0.44.

Brent crude futures were down 37 cents at 10:49 a.m. EST (1549 GMT) at $84.41 a barrel. US West Texas Intermediate (WTI) crude futures fell 79 cents, or 0.9%, to $83.36.

Spot gold rose 1.1% to $1,851.00 an ounce

Editing by John Stonestreet, Andrew Cawthorne and Mark Heinrich


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