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T-bills rally after CPI pushes back decline: markets wrap themselves

By on September 14, 2021 0

(Bloomberg) – Treasuries rallied and US stocks fell after a less than expected rise in inflation was seen as giving Federal Reserve officials more flexibility when it comes to withdraw the stimulus measures. The dollar has fluctuated.

10-year benchmark bond yields fell 5 basis points to 1.26%, narrowing the spread between short-term and long-term US debt. The financials, industrials and energy sectors led the S&P 500 lower, even after the Labor Department announced that the consumer price index rose 0.3% per year. report to July. Economists called for a gain of 0.4%. The Dow Jones Industrial Average was weighed down by Goldman Sachs Group Inc. and Caterpillar Inc.

“It appears that the continued rally in Treasuries is due to speculation that some people think CPI data is pushing the Fed back,” said Blake Gwinn, strategist at RBC Capital Markets. Gwinn has said he disagrees with this view and continues to see the Fed announce the start of its reduction in asset purchases in November or December.

The CPI figures offer some validation of the views of Fed officials and the Biden administration that high inflation will prove to be temporary. The report could also help blunt criticism from Republicans that President Joe Biden’s economic stimulus spurs damaging inflation as he seeks to sell off a colliding $ 3.5 trillion long-term tax and spending package. also to the opposition of moderate Democrats.

The focus was firmly on price pressures, with a commodity gauge around a decade high. The global stock rally is facing headwinds over concerns over the strain of the delta virus and the risks of high inflation, which are being fueled by supply disruptions linked to Covid-19.

“Today’s massive sell-off of stocks is simply a continuation of the weakness we saw last week,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors. “While the August CPI report guarantees virtually no cut announcements at next week’s FOMC meeting, the clear and present danger is that the economy is slowing.”

Elsewhere, the Nikkei 225 Stock Average closed at the highest level since 1990. Hong Kong and China faltered as traders assessed the problems of indebted developer China Evergrande Group, Beijing’s regulatory restrictions and a virus outbreak.

Here are some events to watch this week:

China Retail Sales, Real Estate Prices, Industrial Production, Wednesday Quadruple Day of Witchcraft for U.S. Markets, Friday

For more market analysis, read our MLIV blog.

Some of the main movements in the markets:

Actions

The S&P 500 fell 0.6% at 4:02 p.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average fell 0.8% The MSCI World index fell 0.4%

Currencies

Bloomberg Dollar Spot Index was little changed Euro was little changed at $ 1.1804 British pound fell 0.2% to $ 1.3806 Japanese yen rose 0.3% to 109.67 for a dollar

Obligations

The 10-year Treasury bill yield fell five basis points to 1.27% Germany’s 10-year yield fell one basis point to -0.34% The 10-year yield of Great Britain was little changed at 0.74%.

Merchandise

West Texas Intermediate crude was little changed Gold futures rose 0.7% to $ 1,807.20 an ounce

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