Urgent: Very negative inflation data..Panic in the markets

Urgent: Very negative inflation data..leads the dollar to a violent rise, and gold is falling

Yesterday's Fed minutes were released to shed additional light on the most important monthly report in the economic world, the US inflation report, which Fed members are trying to bring down using aggressive monetary policy.

inflation data

Year-on-year headline CPI rose 8.2%, while experts expected Dow Jones to rise 8.1%, down from 8.3% in the previous reading.

On a monthly level, it rose by 0.4%, while experts expected it to rise by 0.2%.

The core consumer price index (excluding food and energy) rose on an annual basis by 6.6%, and experts expected it to rise by 6.5%.

On a monthly level, it rose by 0.6%, which is higher than experts' expectations of 0.5%.

MoM Real Income Index decreased by -0.1 from September.

unemployment data

The US economy received 228,000 jobless claims, which is higher than the expectations of 225K, and this is an increase from the previous week's reading, which recorded only 219,000 applications received.

Markets after data

The US dollar index rose strongly after the data, turning from negative (0.5% loss) to positive, and rising 0.43% in the minutes following the negative data.

The euro fell by 0.40%, falling below 0.97 to 0.9649 against the dollar.

Gold fell a full point, and gold contracts are now trading at $1,661.45 an ounce, while spot contracts are down 1% as well, at $1656.53 an ounce.

US treasury bond yields rebounded to turn excessively positive, 10-year treasury bond yields rose by 2.32% and are now 3.993%, while two-year treasury bond yields rose by 3.53% to 4.4383%.

Silver fell by 2.33% and fell below 19 dollars to record 18.5 dollars an ounce.

Oil futures also fell, as Crude Oil lost 1.39%, and Brent Crude fell 0.96%.

And US index futures turned into violent losses in pre-opening trading, and the S&P index lost 1.84% in pre-opening trading, as well as Dow Jones futures fell by 1.44% and Nasdaq indices fell by 2.6%.

Markets before the release of the data

The US dollar index fell strongly, losing 0.5% of its value to record 112.668 against a basket of foreign currencies, as well as the US Treasury bond yields. The 10-year treasury bond yields lost 0.82% of its value to record 3.870%, while the two-year treasury bond yields stabilized at 4.2869%. .

As for gold, it rose before the release of the data to 1682.6 for gold futures, up by 0.3%, while spot contracts rose by 0.18% to record $1676.32 an ounce, and silver jumped after falling yesterday by more than 2% to levels of $19.140 an ounce, up by 1.11%.

Oil is trading sideways after falling yesterday on rising fears of a recession resulting in violent weakness in demand.

The euro is now trading at 0.9744 against the dollar, up 0.42%, while the Turkish lira fell against the dollar by 0.12%, and the dollar is now equal to 18.5889 Turkish liras.

Futures were up in pre-open trading, with futures contracts for the S&P 500, Dow Jones, and Nasdaq up 1.06%, 0.98%, and 0.82%, respectively.

Bitcoin fell to the lowest level of $ 19 thousand, to swim at $ 18,706 for the symbol, down by 2.14%, while Ethereum lost 4.41% of its value and is now at $1240.83.

Urgent: Panic in the markets .. The Federal reserve got the green light for the fatal strike

Dow futures fell more than 500 points after a warmer-than-expected inflation report, and futures after the data release turned towards a violent fall as markets re-pricing interest rates.

Markets were expecting the US Federal Reserve to raise interest rates by around 75 basis points, while expectations seemed to be skewed toward a more aggressive tightening of 100 basis points following the shocking data.

100 points

In an analysis published on Saudi Investing, the economist, Ghaith Abu Hilal, said that if inflation data is released high, the markets will mostly exclude 50 basis points from their bet.

interest pricing

While the Fed's follow-up tool, according to Nifstung, indicates that it will maintain its policy of raising interest rates until February 2023 when it will reach rates at 4.75 - 5.00.

Stocks are collapsing

Stock futures retreated, giving up earlier gains, after a headline consumer inflation report came in higher than expected, indicating that the Federal Reserve is likely to continue raising interest rates.

Dow Jones Industrial Average futures were down 530 points, or 1.80%. S&P 500 and Nasdaq 100 futures fell 2.18% and 2.97%, respectively.

The yield on 10-year US Treasuries rose to over 4% as the bonds were sold - yields are reflected in the price.

storm data

The consumer price index rose 0.4% during the month, more than the 0.3% estimate by Dow Jones, and on an annual basis, the inflation rate rose 8.2%.

The report notes that inflation is a persistent problem even with significant increases in interest rates from the central bank.

Going forward, the Fed will likely continue to introduce increases and keep interest rates high until there are signs that inflation is abating.

75 points

There is a chance of a price increase of 75 basis points per second this year, says Chris Zaccarelli, a chief investment officer of the Alliance of Independent Advisors.

"The higher-than-expected CPI report released on Thursday opened up the possibility of an additional 0.75 percentage point interest rate increase from the Federal Reserve this year," said Chris Zaccarelli.

"Not only will the Fed raise rates by 75 basis points next month, but there is now a possibility that it will raise rates by another 75 basis points in December," said CIA's chief investment officer.

Interest hits stocks

“It is very difficult for this market to build a sustainable rally on the back of very high inflation and expectation that the Fed will be tighter than ever,” Zacarelli said.

"We've been pretty consistent in saying a recession was a possibility, and bear market rallies likely to be unsustainable," added CIA's chief investment officer.

Zacarelli added that it makes sense to have defensive investments, both in terms of shorter duration, higher quality with bonds, and with more stagnant resilient sectors such as healthcare and inflation-hedge industries in the energy and materials sectors.”

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