US Inflation Eased to 7.7% in October | Market Reaction
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.
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