The Dow Jones Industrial Common (DJIA) lumbered into file highs on Friday, posting intraday bids north of 47,300 for the primary time ever. Investor sentiment hit excessive gear after US Shopper Worth Index (CPI) inflation got here in under expectations, retaining hopes for additional rates of interest from the Federal Reserve (Fed) pinned to the ceiling.
Headline CPI inflation got here in at 3.0% YoY in September, clocking in just under the anticipated maintain at 3.1% and sending buyers scrambling to select up threat property on expectations that the Fed is now locked into two quarter-point rate of interest cuts by the top of the 12 months. US CPI metrics broadly got here in under expectations, and markets are disregarding the truth that most inflation readings proceed to run effectively above the Fed’s 2% mandate.
Price minimize bets proceed to climb on not-hot inflation knowledge
In accordance with the CME’s FedWatch Instrument, fee market bets of back-to-back rate of interest cuts in October and December are over 95%. Price merchants have additionally pulled ahead the date for the primary rate of interest minimize in 2026 as much as March from April.
September’s Buying Managers Index (PMI) survey outcomes additionally shocked markets to the upside, with the Providers element rising to 55.2 versus the anticipated 53.5. Nevertheless, regardless of the upswing in enterprise confidence, shoppers stay notably extra downbeat, with the College of Michigan Shopper Sentiment Index declining to 53.6 from 55.0. UoM Shopper 5-year Inflation Expectations additionally rose once more, climbing to three.9% from 3.7%.
Dow Jones each day chart
Financial Indicator
Shopper Worth Index ex Meals & Power (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the costs of a basket of consultant items and providers and presenting the information because the Shopper Worth Index (CPI). CPI knowledge is compiled on a month-to-month foundation and launched by the US Division of Labor Statistics. The YoY studying compares the costs of products within the reference month to the identical month a 12 months earlier. The CPI Ex Meals & Power excludes the so-called extra unstable meals and power elements to provide a extra correct measurement of value pressures. Typically talking, a excessive studying is bullish for the US Greenback (USD), whereas a low studying is seen as bearish.
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