Posted on 04/10/2024 6:30:09 AM PDT by lasereye
U.S. inflation pressures quickened again last month, with core price pressures also rising past Wall Street forecasts, a reading that will cast further doubt on market bets for a June interest rate cut from the Federal Reserve.
The headline consumer price index for March was pegged by the Commerce Department at 3.5%, rising from the prior month's tally of 3.2% and coming in ahead of Wall Street's 3.4% consensus forecast.
On a monthly basis, inflation edged 0.4% higher, matching the 0.4% gain in February but also coming in ahead of Wall Street's 0.3% forecast.
So-called core inflation, which strips out volatile components like food and energy, held at 3.8%, the lowest in more two years but higher than Wall Street's 3.7% forecast. The monthly reading of 0.4% also topped Wall Street forecasts and matched the February reading.
Fed Chairman Jerome Powell has said the central bank will be "very careful" in determining when it will begin cutting rates.
The Fed tracks core inflation pressures as part of its price-stability mandate, and the year-on-year gains remain nearly double its preferred target of 2%.
"Today’s crucial CPI print has likely sealed the fate for the June FOMC meeting with a cut now very unlikely," said Seema Shag, chief global strategist at Principal Asset Management.
"This marks the third consecutive strong reading and means that the stalled disinflationary narrative can no longer be called a blip," she added. "In fact, even if inflation were to cool next month to a more comfortable reading, there is likely sufficient caution within the Fed now to mean that a July cut may also be a stretch, by which point the US election will begin to intrude with Fed decision making."
U.S. stocks turned sharply lower following the data release, with futures tied to the S&P 500 indicating an opening bell decline of 78 points while those tied to the Dow suggest a 465 point slump. The rate-sensitive Nasdaq is called 285 points lower.
Inflation report will disappoint markets (and the Fed) READ MORE Benchmark 10-year Treasury note yields surged 16 basis points following the data release to change hands at 4.507% while 2-year notes were pegged at 4.8946%, around 12 basis points higher from prior to the data release.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.67% higher at 104.828.
Last week, the Labor Department said 303,000 new jobs were created over the month of March, a bigger-than-expected overall tally that spooked investors concerned about the impact of rising wages on inflation.
However, the report also noted that average hourly earnings growth was largely in line with Wall Street forecasts, giving rise to bets that the economy was absorbing the new hires without a corresponding spike in wage gains.
The CME Group's FedWatch now suggests only a 21% chance of a June rate cut, down from around 51% prior to the data release, with markets now reducing their overall tally for 2024 rate reductions to two from three.
"Is it time to say goodbye to 2024 rate cuts? Quite possibly," said Giuseppe Sette, president at Toggle AI.
"As a rule, the Fed has always kept rates above inflation, short of a recession," he added. "With both headline and core inflation hovering in a stable orbit around 3.5%, and strong payroll numbers, the hawks in the Fed will have plenty of ammunition to push rate cuts in the future."
Forget about much lower interest rates - unless we go into a recession. Wall Street is puking as a result.
Interest should be going up and they are talking about rate cuts? If you were actually targeting inflation they’d bw going on and certainly rate cuts wouldn’t even be in the discussion.
Poor Fed. As part of the Deep State, they of course want Biden to win in November.
But what to do? Lowering interest rates is good for borrowers, but won’t tame inflation. Raising interest rates will tame inflation, but will anger borrowers.
Maybe the Fed should do nothing, and just hope the Dominion voting machines and the mail-in ballots do their magic once again.
Wait until Joe’s Buy Back Votes plan with student loan forgiveness hits the inflation figures.
DOW down more than 500.
“So-called core inflation, which strips out volatile components like food and energy…”
In other words all the stuff us proles buy every single day. And when did food become a “volatile component”?
L
The way President Sniffer is dealing with inflation is by opening the borders and allowing cheap labor to work ‘under the table’ thereby cutting wages for Americans.
In short Biden is sticking a knife in the back of working class and middle class families.
Yes, you're right. Big fat ugly thumb on the scale of justice, fair play and decency. Eff 'em.
It really is so simple.
The standard definition of inflation is too much money chasing too few goods.
Too much money can be created by interest rates that are way to low, generating too easy credit, generating large levels of spending based on large levels of borrowing. Too much money can also be created by government borrowing trillions it does not have and flooding the economy with expenditures from that borrowing. It is quite obvious that the latter is the cause of the inflation - Biden’s trillion$ in borrowing and spending.
The Fed is having an uphill climb trying to tame inflation while everything Biden is doing is fueling inflation.
Even Biden’s open border is fueling inflation, with millions of illegals putting pressure on food, housing, education and medical care, with city, state and federal efforts subsidizing them.
My wife, son and I went out for dinner last night to celebrate her 60th birthday. It was at one of the more expensive restaurants in town. By 5:30 the place was full. On a Tuesday night. Which frankly surprised us. Most of the people were middle aged to older.
So, my point is people continue to spend money here in southern NH.
FYI, my son paid for dinner. Which I think it made him proud to do. He has a good job and is doing well for a 25 year old.
One of the hallmarks of runaway inflation like what we’ve seen in Argentina in the last few years (over 100% annual inflation) is people spend their money as quick as they get it as they realize it will be worth significantly less in a month or two. Inflation can significantly depress how much the general public tries to save (both by giving people less money to save as they have to spend more to keep up with price hikes and by creating a mindset in people that the effort to put away savings just isn’t worth it).
Um, rates may have to be increased, not cut.
For starters, I suspect the market hasn't digested this poor Biden economy just yet.
You’re right.
Here is a reason why the economy is where it is.
The FED has also been run by people who have never worked but who have always “studied”.
That is why when one speaks they speak in gibberish so they cannot be pinned down.
The one below is a diversity hire. Not qualified at all. I wonder what the democrat party really wants her to do in her position.
Luke Rosiak
@lukerosiak
Joe Biden appointed to a 15-year term on the fed an “economist” who had never published a peer-reviewed paper on economics. And the papers she did publish (on race), it turns out, at times plagiarized and often recycled language from co-authors’ old work.
https://twitter.com/lukerosiak/status/1778078732965556363
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