CPI Report Shows High Inflation, Federal Reserve Minutes Still to Come
Stock markets reacted to the US consumer price index data today by dropping dramatically, and they may continue to drop this week.
The Consumer Price Index report was released today for the month of March, and it showed higher than expected inflation numbers.
The US CPI rose by 0.4% for March, which comes to a 3.5% annual increase. The expectation was that it would only rise by 0.3% and that annual inflation would increase by 3.4%.
The CPI data also revealed Core CPI, which takes the energy and food data out of the total and gives a different percentage. That Core CPI report showed an increase of 0.4% from the previous month, which was also above expectations.
The hotter than expected inflation data has caused stock prices to drop and had a knockdown effect on government bond yields, bringing them up. The Dow Jones fell by 0.94%, with the Nasdaq Composite dropping 0.92%. The S&P 500 also fell, losing 0.83%. This is the biggest movement for any of these stock indices for the week so far, proving the severity of the US CPI data.
More to Come for Inflation Numbers
Later today, the Federal Reserve will issue its minutes for the month of March. The expectation is that they will talk about higher than expected inflation and hold off on interest rates cuts for a while longer. As long as inflation continues to increase, those rate cuts are likely to be pushed back for fear that they will propel inflation even higher and hinder inflation levels from coming back down.
Keep in mind that inflation was higher than anticipated for both January and February. That makes three consecutive months where inflation was unexpectedly high, and that sets a dark tone for all markets.
Major stocks are falling back as expected with a hot inflation reading. They will likely continue to struggle until we see new quarterly reports for many of them. Traders will be hesitant to invest in stocks, commodities, and the cryptocurrency market in this environment of high inflation.
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