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Midday Update
The market reaction after the US CPI inflation release has been for the US dollar to sell-off broadly against its major counterpart currencies, and stock market buying in the United States has also resumed.
Today’s CPI number showed that US CPI rose 7 percent, which was broadly in-line with markets expectations of a rise of 7 percent over the same period one-year prior to today’s CPI inflation release.
On the monthly, US CPI inflation came in slightly hotter than expected, with a 0.5 percent increase. Potentially, the positive reaction from the market is that the prior monthly reading was actually 0.8 percent.
US CPI Year-on-year.
Source by Bloomberg.
Additionally, the real weekly earnings data inside today’s report showed a 0.1 percent increase, which was better than previous reading of -0.2 percent, which has now been revised to -0.4 percent. So, with rages rising alongside prices, the picture is not as bleak
Already, we have seen the EURUSD pair surge above the 1.1400 level as stop were triggered around 1.1390 after the release, while the British pound has risen above the technically important 1.3660 resistance zone.
In terms of the stock market reaction, all the major US indices are higher, while the FTSE100 is surging to new weekly, monthly, and yearly highs today. UK miners are also having a good day as the price of gold approaches a multi-month high.
We are also seeing WTI and Brent oil posting strong gains today as commodity prices start to surge. In fact, most commodity prices are feeling the love today. Gold, Copper and silver are once again having stellar days.
Cryptos have joined in the bull party, with Bitcoin advancing past the $43,000 barrier after dropping to its lowest trading level since September 2021 at the start of the week. Ethereum is also making waves above $3,300.
There isn’t a great deal to get excited about during the US session, until we the 10-year bond auction and monthly budget statement during the mid-Wall Street session. The 10-year has been a big mover on the bond market lately, with yields rising, so potentially, the market could come to life after the auction.
