The US CPI came in higher than expectations. Shelter continued its rise with a 0.6% increase contributing to the gains. US stocks have moved lower. Yields have moved higher, and the US dollar is higher as well as the market reacts to the higher inflation:
- EURUSD: The EURUSD has moved down from 1.0790 to 1.0723. The low prices (double bottom) from last week are being tested at that level.
EURUSD tests the lows from last week
- USDJPY: The USDJPY has moved to a new high going back to November 17. The price has moved above a swing area on the daily chart between 149.70 and 150.158 (see chart below).
- GBPUSD: The GBPUSD is now trading back below the 1.2600 level (swing area between 1.2602 to 1.26137). The current price is trading at 1.2590. Staying below 1.26137 is more bearish (it takes the -price out of the up-and-down trading range that persisted from mid-December until last week). See the red box on the chart below. Last week, the price broke out of that range but failed. Today the 200 bar MA was tested ahead of the release.
The market is now pricing in -92 basis points of cats for the rest of the year from -113 bps before the data:
In US stocks are not taking the numbers well. Futures are implying:
- Dow industrial average -277 there blackout points versus -35 points prior to the release
- S&P index -51.34 points versus -15 points prior to the release
- NASDAQ index -264 points versus -108 points prior to the release
Looking at the US yield curve:
- 2-year yield 4.623% +15.4 basis points
- 5-year yield 4.289% +16.1 basis points
- 10 year yield 4.290% +12.1 basis points
- 30-year yield 4.46% +7.5 basis points
