September Inflation Hits Highest Since 1982

  • US stocks plunged on Thursday, then soared after September’s CPI report doubled expectations to 0.4% month-on-month.
  • September’s inflation report threw cold water on hopes that the Fed will walk away from its interest rate hikes.
  • Fed funds futures now forecast a 75 basis point rate hike in November and December.

US stocks plunged on Thursday, then climbed after The September CPI report showed that inflation continues to reach low levels not seen for four decades.

The S&P500 was down 2.4% as its low for the day, before recouping all those losses and climbing as high as 2%. The reversal came after the S&P 500 tested 3,500, briefly hitting a low of 3,491. The 3,500 level represents a 50% retracement of the March 2020 low at around 2,200 and the January high at around 2,200. around 4,800.

Month-to-month inflation hit 0.4%, double expectations of a rise of just 0.2%. The CPI rose 8.2% year-on-year, beating estimates of an 8.1% rise. Even excluding food and energy prices, the CPI rose 0.6% month over month, beating estimates of a 0.4% rise.

The searing CPI report dashed all hopes that the Fed will back away from its aggressive rate hikes anytime soon. The Fed is now expected to raise interest rates by 75 basis points in November and December, according to the FedWatch CME Tool.

The shock CPI report erased early morning market gains, with the S&P 500 briefly rising around 1% after the UK government signaled a policy reversal from its proposed tax cut plans.

Here’s where the U.S. indices stood at 11:52 a.m. ET on Thursday:

“One line: awful,” Pantheon Macro chief economist Ian Shepherdson told Insider. “The downward pressure on inflation is visible everywhere except in the inflation numbers.”

Here’s what else is happening this morning:

In commodities, bonds and crypto:

  • West Texas Intermediate Crude Oil rose 1.70% to $88.75 a barrel. Crude Brentthe international oil benchmark, jumped 1.74% to $94.06.
  • Gold fell 0.38% to $1,671.20 an ounce.
  • The 10-year Treasury yield jumped 5 basis points to 3.95%.
  • Bitcoin fell 0.61% to $18,972, while Ether fell 2.25% to $1,257.

Leave a Comment

Your email address will not be published. Required fields are marked *