Markets Drop Ahead of CPI – Nasdaq Down 1.2%
US markets experienced a poor day yesterday as investors look ahead at key inflation data, all the major US indices took a hit, the Nasdaq down 1.17% – heavily influenced by Nvidia dropping 4.7% on the day. The S&P and Dow dropped 0.54% and 0.7% respectively. Long-dated treasury yields fell as the $38bio auction for 10-year paper proved popular, finishing up at 3.999%, shorter dates however rose, with the key 2-year seeing an increase of 6 basis points. FX markets remained docile with major currencies all trading in relatively tight ranges, although in precious metals we saw further declines for Gold and Silver, Gold trading down to monthly lows under $1,915/oz.
CPI Data Part of the Fed Jigsaw
News has played a major part in moves in financial markets this week and that is set to change today with the release of the US CPI data. Although not the favoured inflation indicator for the FOMC, many still see the CPI number as a key piece in the Fed jigsaw puzzle and with the next rate decision still 41 days away, traders are expecting to see some good moves after we get the latest update. The expectation is for a 0.2% increase for both the headline and Core monthly numbers and for the year-on-year data to show a 3.3% increase. Anything significantly away from expectation will see strong moves across products and if in line, then we will see investors look to jump back on recent trends.
All About the Inflation Numbers Today
Traders are expecting a quiet first couple of trading sessions to the day as all eyes will be on the US CPI numbers due out in the New York session. There are a couple of data releases that investors will look at closely, including an Inflation expectations report in Australia and possible New Loans data out of China in the Asian session as well as the latest ECB Economic Bulletin in the European day. However, it is the US session where we should see most of today’s action as not only do we have the CPI numbers, but also the weekly unemployment claims update followed later in the day by Fed member Patrick Harper speaking.
