‘Horrible CPI’ has some bracing for Jumbo Hike: Wall Street reacts

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(Bloomberg) – Wall Street hopes the Federal Reserve might be able to ease its battle against inflation later this year was finally dashed on Thursday when consumer price index data for September arrived from unexpected way. The core CPI, which excludes food and energy, rose 6.6% from a year ago, the highest level since 1982.

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S&P 500 stock futures fell below 2% after rising 1.3%, and 10-year Treasury yields jumped above 4%.

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“Horrible CPI number,” said Andrew Brenner, head of international fixed income at NatAlliance Securities. He wondered what the Fed might have to do about interest rates: “Are they going to go to 100?

Here’s what other analysts said:

Steve Chiavarone, Senior Portfolio Manager at Federated Hermes:

« This report increases the risk that we will see a new round of headline inflation before the end of the year. With energy prices rebounding, a mid-90s oil price in December could see us overtake the peak of 9.1% recorded in June.

« Looking at the components, what’s most worrying is the big jump in services. Services inflation is the stickiest. This is where housing prices and wages reign supreme.

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Priya Misra, Global Head of Rates Strategy at TD Securities:

« Stronger headline and core report to make the market move meaningful. Market price for terminal rate was 4.66% before the report, now at 4.7% and that may continue to rise We are looking for 5% terminal (4.83% headcount).

Oscar Munoz, US macroeconomic strategist at TD Securities:

« I don’t think it changes much for the Fed, just lowers the idea of ​​a Fed pivot. They should continue to climb to a 75 basis point level in November and increase the risk of An additional 75 bps for Dec. Although we believe they will make 50 bps, as they move deeper into restrictive political territory, they will become less hawkish in terms of pace of change. rise in rates given that they have risen so much in the last year and growing concerns about financial stability.