Disappointing US inflation dashed Fed pivot hopes [Video]

(Ipek Ozkardeskaya – Swissquote Bank Ltd)

Ouch! The US inflation data disappointed yesterday, and dashed hopes of seeing a dovish pivot regarding the Federal Reserve (Fed) policy in the foreseeable future. The US 2-year yield spiked more than 5% to 3.80%, the US dollar index jumped 1.50%, and equities slumped. The S&P500 futures fell free as soon as we saw the inflation print come in, and the index closed the session 4.30% lower, having slipped below the 4000 mark. Gold tipped a toe below the $1700 level posterior to the US inflation data and is trying to find ground around this level this morning.

Two major catalyzers of the two bullish price actions since summer, recession chatter and softening inflation, have now both fallen.

The strong inflation data, which boosted the Fed hawks, also weighed on the global growth prospects sending the barrel of American crude down to $81 first. But oil managed to recover losses on news that the US would refill the Strategic Oil Reserves at prices below $80 per barrel.

Later today, the US will reveal the latest producer price index. The PPI is expected to have eased from 9.8% to 8.8% in August. A sufficiently soft figure could spray some water on fire, but will hardly reverse the bad mood. The dollar will likely remain strong, equities, gold and cryptocurrencies will likely remain under pressure until investors find another glimpse of hope, somewhere in the dark.

10 year US yields ready to attack 3.5%

(Gregor Horvat – Wavetraders)

USD is up across the board on hawkish FED policy speculation after the US CPI data came higher than expected. The USD is very strgon and almost erased all of the losses vs other currencies as stocks came down and US yield rally. The risk-off mode is here and will likely resume as recent price action appears impulsive. We also think that US yields are ready to take out that 2022 highs, so USD can stay strong in sessions ahead. Maybe the only pair to watch for potential surprise in the opposite direction can be USDJPY after another day of BoJ intervention talk.