Midday gains in Europe swiftly turned to losses and US futures shifted from green to red. Stocks, which had rebounded in recent days on hopes that a peak in inflation would allow a rapid end to hawkish rate hikes and thus avoid a recession and attain a "soft" landing of the economy, abruptly turned lower. However, the inflation figures were "hotter than expected in August and put a chill on some of the peak inflation/peak hawkishness/soft landing chatter," said analyst Patrick O'Hare at. While markets were already largely pricing in another 75-basis-point interest rate hike by the Fed at its next gathering, there had been hopes that having past the peak of inflation would allow the Fed to let up thereafter. This rose by 0.6 percentage points month-on-month, compared to a 0.3-point gain in July. He pointed to core inflation that excludes volatile energy and food prices, which is what Fed policymakers pay particular attention to.
"Both headline and core US CPI were substantially hotter than expected in August, leading currency and fixed income markets to embark on a swift and dramatic reversal from recent price action, where traders and investors had largely positioned themselves for a softer inflation print," said market analyst Jay Zhao-Murray at Monex. inflation would lessen pressure on the Fed to continue aggressively raising interest rates, shot higher. The dollar, which had fallen against its major rivals in anticipation of a significant slowdown in U.S. However, CPI rose 0.1 percent on a monthly comparison in August, after holding flat in July, according to government data Tuesday, a disappointing result amid widespread expectations that inflation would fall in the month. inflation slowed less than expected.Īnnual consumer price inflation slowed slightly in August to 8.3 percent from 8.5 percent in July, the Labor Department said in an anxiously-anticipated report that the Federal Reserve is watching closely Stock markets hit reverse while the dollar shot higher Tuesday after data showed that U.S.
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