Markets in Turmoil Following US Inflation Report

Volatility was significantly higher Thursday as traders paid attention to the latest US inflation data, while the Fed’s Bullard also rattled the markets.

Yesterday’s US CPI inflation came out above market expectations, again, printing a shocking +7.5% year over year – the highest since March 1982. Again, food, energy, and used car prices were the most significant drivers. The energy index rose 27.0% over the last year, and the food index increased 7.0%. 

The core CPI – excluding food, energy, and other “volatile” things – rose 6.0% yearly, also the highest since 1982.

Additionally, the St. Louis Federal Reserve President, James Bullard, publicly expressed his opinion that the Fed should potentially raise rates earlier than expected to fight persistent inflation. 

The US yields literally exploded higher after these events, with the two-year yield soaring nearly 20% and jumping above 1.6% for the first time since January 2020. Likewise, the ten-year yield flew above 2.0%. 

Nearly every other asset class collapses – whether it was precious metals, stocks, *USD pairs. 

Later today, the US Michigan consumer sentiment index for February is due, expected to improve slightly. However, continuous inflation and the recent decline in the stock markets could have caused more pain for consumers, so the report might actually come out below expectations.

Additionally, the Fed monetary policy report is due today. This report is submitted semiannually to the Senate Committee on Banking, Housing, and Urban Affairs and to the House Committee on Financial Services, along with testimony from the Federal Reserve Board Chair.

Source: https://www.axiory.com/analytics/market-news/markets-in-turmoil-following-us-inflation-report