[US market conditions]Stocks continue to fall, government bond yields soar-market turmoil due to accelerated CPI-Bloomberg

The US stock market on the 10th continued to fall. The S & P 500 stock index fell sharply for the first time in a month. US Treasury yields skyrocket. The US Consumer Price Index (CPI) in October shook the financial markets.

US Consumer Price Index, Highest Growth Since 1990-Inflationary Pressure Increases

  • US stocks fall sharply for S & P for the first time in a month-Nasdaq’s decline is noticeable
  • Treasuries fall, 10-year bond yield 1.56% -low bids and CPI
  • Dollar appreciation against the yen in the high 113 yen range-with rising US Treasury yields
  • NY crude oil fell sharply, selling due to inventory increase-accelerating decline due to strong dollar
  • NY gold continues to grow sharply, high since June-reacts to CPI

When the auction yield on the 30-year bond auction exceeded expectations, the S & P 500 class expanded its decline. Two-year bond yields have also risen since the release of CPI statistics. The view on the timing of rate hikes has changed dramatically. The break-even rate for five-year inflation-indexed bonds (TIPS) has risen to record highs.

The Nasdaq-100 index, which is centered on high-tech stocks, has fallen sharply. High-value, high-tech companies that make up the index are believed to be most vulnerable to inflation.

S & P 500 seeds are 4646.71, down 0.8% from the previous day. The Dow Jones Industrial Average is down $ 240.04 (0.7%) to $ 36079.94. The Nasdaq Composite Index fell 1.7%. As of 4:12 pm New York time, 10-year bond yields have risen 13 basis points (bp, 1bp = 0.01%) to 1.56%.

October CPI rose 6.2% year-on-year, higher than Bloomberg’s median economist forecast of 5.9%.

“Now that the 6% level has been exceeded, US financial authorities will be a little impatient,” said Fiona Cincotta, senior financial market analyst at City Index. “I don’t think they can ignore the 6.2% rise in the CPI. It will encourage a more hawkish feel,” he said.

Price Pressures Run Hot

U.S. October headline inflation increased by the most since 1990 on annual basis

Source: Bureau of Labor Statistics, Bloomberg survey

In the foreign exchange market, the dollar is totally stronger than the 10 major currencies. The background is that US Treasury yields have risen. The currencies of resource-rich countries have also received further selling pressure against the backdrop of low crude oil prices.

As of 4:12 pm New York time, the Bloomberg Dollar Spot Index, which shows the movement of the dollar against the 10 major currencies, rose 0.9%, the highest since November 2020. The dollar is up 0.9% against the yen to 1 dollar = 113.93 yen. The euro is down 1% against the dollar at 1 euro = 1.1478 dollars.

New York crude oil futures prices have fallen sharply. The unexpected increase in domestic crude oil inventories called for crude oil sales, and the decline accelerated as the dollar rose.

The New York Mercantile Exchange (NYMEX) West Texas Intermediate (WTI) futures December contract ends at $ 81.34 a barrel, $ 2.81 (3.3%) cheaper than yesterday. It was the biggest drop in the past week. The January contract for Brent North Sea in London ICE is down $ 2.14 to $ 82.64.

The New York gold market continued to grow sharply, hitting a high for the first time in almost five months. The higher-than-expected rate of increase in US consumer prices in October is expected to put pressure on US financial authorities to rush out of the zero interest rate policy.