Greenback jumps; stocks, bonds dented by hot US inflation data
The dollar index, which tracks the US currency against six others, rises nearly 0.4%
The US dollar surged nearly 0.4% on Wednesday (Oct 14), while Treasury yields surged and stock futures fell, following the release of consumer inflation data that revealed a sharper-than-anticipated rise in September. The Labor Department reported that core consumer price index increased by 0.3% in September from August, exceeding economists' expectations for a 0.2% rise.
On an annual basis, core CPI, excluding food and energy prices, climbed by 2.6%, surpassing forecasts for a 2.5% increase, while the headline rate rose by 3.7%, exceeding estimates for a 3.6% increase. The dollar index, which measures the US currency against six others, rose by 0.3% against a basket of currencies. US two-year Treasury yields jumped 7 basis points to 4.872%, up from around 4.77%, reflecting heightened expectations for inflation and monetary policy adjustments.
Analysts noted that while energy prices dominate headlines, the report pointed to deeper inflation issues, suggesting that domestic price pressures are becoming more entrenched rather than easing. This led markets to anticipate that the Federal Reserve may need to tighten policy more aggressively to bring inflation back to target, with traders increasing their bets on another rate rise this month to around 47%, up from about 20% previously.
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