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From the supermarket to paying the rent, high prices have been slamming Americans, but inflation is coming down.
The US Consumer Price Index (CPI) rose 7.7% year-over-year in October, according to data from the Bureau of Labor Statistics. That is less than the 7.9% estimate from economists.
Source: Bureau of Labor Statistics
This could mean that the Fed’s actions in raising the key rate were effective in lowering inflation. This is also exactly what the market needed to restore faith in it and boost trading.
As a legitimate result, the report propelled U.S. stocks forward and sent Treasury yields tumbling as Wall Street weighed the implication of the softening data on Federal Reserve policy.
NASDAQ chart, Nov. 10
Immediately after the release of the data, the NASDAQ ($NAS100), Dow Jones ($DOW30), and SP500 ($SPX500) all began to climb upwards. This indicates a positive momentum, which could last for some time.
SP500 chart, Nov. 10
At the same time, the USD came under heavy selling pressure with the initial reaction. The US Dollar Index was last seen, losing nearly 1% on the day at 109.45.
Lower inflation puts pressure on the national currency, but supports the stock market. This natural reaction is happening in the market right now.
In addition, analysts consider the most likely scenario to be an increase in the next Fed’s key rate by 0.50% because of the lower inflation reading.
Summary
Stock futures surge after data shows inflation eased to 7.7% in October
That falls below what economists expected to see, potentially supporting Fed’s policy
The US Dollar Index fell almost 1.2% in reaction to the lighter-than-expected CPI report.
IMPORTANT NOTICE: Any news, opinions, research, analyses, prices or other information contained in this article are provided as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. Past performance is not an indication of possible future performance. Any action you take upon the information in this article is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this article.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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