Hot Inflation Puts Fed Rate Hikes Back on the Table

It's Chuck, Paul, and Tucker with you here today.

And top story, unsurprisingly, is today's inflation report.

Uh, at 8:30 AM Eastern Time, we received the CPI data, consumer price index data, for the month of September, and it was not great.

Now, it was expected to be not great, but it was even more not great, uh, than we were expecting.

Headline came in pretty much in line with expectations at, uh, .6% month over month, though on the high side of there.

Remember, when you round anything to, uh, one decimal point, a .6 could be as low as .56 or as high as .64, and in this case, it was closer to the latter than the former.

So it was a high .6 reading.

Uh, this ended up pushing up the annual inflation rate to 3.7% versus expectations of 3.6. A- again, the, the, the headline is what it is.

I, I don't think there's a ton of meat on that bone, and I, I just, I, I don't know that there's much there, uh, other than it just being not good.

But we, we knew it was going to be not good because we've all seen what's happened with gas prices, uh, and with diesel prices in the past month, and that is largely what was captured by this, uh, with gasoline prices being up 9.1% and fuel oil prices being up 15.3% for the month.

Not a surprise to anyone.

The part that was a little bit surprising to people was that the core number came in at .3% versus expectations of .2.

And again, remember, when we're talking about rounding, you can have a .26 that rounds up to .3 or a .34 that rounds down.

Uh, and so what we end up with here, uh, this was .33%, so it was a hot .3, uh, if you want to call it that.

And so- Feeling hot, hot, hot ... yes, thank you, Michael.

Uh, what we have here- Feeling hot, hot, hot ...

it, it is, it is a little, little warm.

You're, you're, you're right.

Uh, what we have here is a case where, uh, you've got inflation coming in hotter than expected, and so the obvious predictable response is bonds have sold off over the course of the morning so far, Paul.

Though, if we look at where they are now, 10-year Treasury's up 5.7 basis points.

Uh, at one point, the 10-year was up, uh, around 10 basis points, almost 11, uh, at one point.

And so yields have come in from their highs.

But you've got a bunch of dollar strengthening.

The dollar's up, uh, .66% today, so a huge move in the dollar, uh, taking place on this, uh, with the idea of, hey, more inflation means more rate hikes, and that's attracting capital, uh, into dollars at this point.

Yeah, on the US two-year Treasury, similarly we're seeing a spike of about 10 basis points there too, up at 4.89%.

It's Chuck, Paul, and Tucker with you here today.

And top story, unsurprisingly, is today's inflation report.

Uh, at 8:30 AM Eastern Time, we received the CPI data, consumer price index data, for the month of September, and it was not great.

Now, it was expected to be not great, but it was even more not great, uh, than we were expecting.

Headline came in pretty much in line with expectations at, uh, .6% month over month, though on the high side of there.

Remember, when you round anything to, uh, one decimal point, a .6 could be as low as .56 or as high as .64, and in this case, it was closer to the latter than the former.

So it was a high .6 reading.

Uh, this ended up pushing up the annual inflation rate to 3.7% versus expectations of 3.6. A- again, the, the, the headline is what it is.

I, I don't think there's a ton of meat on that bone, and I, I just, I, I don't know that there's much there, uh, other than it just being not good.

But we, we knew it was going to be not good because we've all seen what's happened with gas prices, uh, and with diesel prices in the past month, and that is largely what was captured by this, uh, with gasoline prices being up 9.1% and fuel oil prices being up 15.3% for the month.

Not a surprise to anyone.

The part that was a little bit surprising to people was that the core number came in at .3% versus expectations of .2.

And again, remember, when we're talking about rounding, you can have a .26 that rounds up to .3 or a .34 that rounds down.

Uh, and so what we end up with here, uh, this was .33%, so it was a hot .3, uh, if you want to call it that.

And so- Feeling hot, hot, hot ... yes, thank you, Michael.

Uh, what we have here- Feeling hot, hot, hot ...

it, it is, it is a little, little warm.

You're, you're, you're right.

Uh, what we have here is a case where, uh, you've got inflation coming in hotter than expected, and so the obvious predictable response is bonds have sold off over the course of the morning so far, Paul.

Though, if we look at where they are now, 10-year Treasury's up 5.7 basis points.

Uh, at one point, the 10-year was up, uh, around 10 basis points, almost 11, uh, at one point.

And so yields have come in from their highs.

But you've got a bunch of dollar strengthening.

The dollar's up, uh, .66% today, so a huge move in the dollar, uh, taking place on this, uh, with the idea of, hey, more inflation means more rate hikes, and that's attracting capital, uh, into dollars at this point.

Yeah, on the US two-year Treasury, similarly we're seeing a spike of about 10 basis points there too, up at 4.89%.