Market Wrap – CPI Report Hits New High

US CPI came in much stronger than expected with a 1.3 percent monthly rises. The report came on the back of a recent warning from the White House about a record CPI number.

The Consumer Price Index in the United States also rose 9.1 percent from a year ago, a 40-year high that defied expectations of moderating price pressures.

Today’s report further highlighted that food, rent and gasoline were among the categories that recorded the biggest increases, further squeezing the American consumer.

In terms of the market reaction, it has been relatively muted. The DXY briefly strengthen but gave back a portion of its gains, while the major US indices remain in the red.

Markets also got another shock today as the Bank of Canada hiked interest rates by 100 basis points today. This brings the official rate from 1.50% to 2.50%.

In the policy statement, the Bank of Canada did pare back language that said it is “prepared to act more forcefully” and explicitly said this is front loading.

That market is now pricing in a slightly higher peak at 3.75%. In terms of market reaction, the US dollar has dropped by around 100 points to 1.2940 against the Canadian dollar.

Downside momentum builds in the oil market following the recent days, today’s data showed that crude oil inventories saw a surprise build of 3.254M vs an expected drawdown of -0.154M estimate.

The report showed that distillates build of 2.668 million vs. 1.591 million estimates, a Gas build of 5.825M vs expectations of -0.357M estimates, refinery utilization 0.400% vs. expected 0.3%. Previously -0.5%, and crude production 12.0 million vs. 12.1 million since last week.

Oil news involving Saudi Arabia is also moving markets, it appears sensitive to the appearance of sacrificing a principled stand on human rights for cheaper energy, the president does not plan to announce any oil deal during his stop in Jeddah.