US Inflation Report Disappointed, Eyes On US Producer Price Index

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.

Stock market drops

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.

Expectations for producer price index

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.

Watch the full episode to find out more!

0:00 Intro
0:23 US inflation disappointed
3:16 US yields, dollar rallied, equities slumped
5:15 Bitcoin, Ethereum under pressure before Merge upgrade
6:01 Oil recovered on US will to refill Strategic Reserves
6:43 Why both hawkish & dovish Fed expectations are bad for gold?
7:30 UK inflation surprised to the downside
8:04 EURUSD down, despite good news from Ukraine
8:30 Watch US PPI today!

Ipek Ozkardeskaya

Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.

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