The information provided by the Department of Commerce indicates a general slowdown in inflation, reaching 3.2%, below market expectations of 3.3%.
The global financial market is in a moment of intense speculation and interpretation after the reading of inflation October, which turned out to be more moderate than expected. Consequently, Wall Streetsupported by the idea of a possible cut in short-term interest rates by the Federal Reserve (Fed), operates upwards.
The information provided by the Department of Commerce signals a general slowdown in inflation, reaching 3.2%, below market expectations of 3.3%. Furthermore, underlying pressures indicate a new two-year low, reaching 4%.
This panorama drives expectations of a rate cut by the Fed next March, increasing the odds to around 25%, as measured by CME Group’s FedWatch. The chances of an increase in interest rates in the next meetings are practically ruled out due to the slowdown in inflation.
Wall Street reacts to inflation data
The repercussions on the markets are notable: US stocks show a solid increase, with the S&P 500 and the Dow Jones increasing its value, while the Nasdaq, focused on the technology sector, is also experiencing a significant increase.
In parallel, Treasury bond yields decline considerably. 10-year bonds fall 19 basis points, reaching 4.443%and 2-year bonds stand at 4.838%, showing a decrease of 20 basis points after the publication of the data.
This situation also impacts the valuation of the dollar American currency, which fell against other world currencies, decreasing by 0.94%, and standing at 104.636 points according to the dollar index.
The behavior of the market after the inflation reading is diverse. The report highlights that the S&P 500 has only fallen three times in the last twelve months in response to inflation data, including a 0.6% decline following last month’s September report.
Source: Ambito
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