USA inflation expectations dip after run-up: NY Fed survey

USA inflation expectations dip after run-up: NY Fed survey

Both readings were higher than expected for a second month in a row.

USA inflation has surpassed expectations for a second month running, reigniting investor nervousness that the robust economy is stoking price pressures that could force the Federal Reserve to raise interest rates more aggressively.

Photo Traders at the New York Stock Exchange last week.

The Iseq was 0.44 per cent weaker.

Bond markets sold off in the immediate aftermath of the announcement, with the United States 10-year Treasury yield rising to highs of 2.88 per cent, its highest since Monday, according to Tradeweb, after previously holding at or below 2.84 per cent. The dollar index jumped as much as 0.5 per cent after the numbers.

Indeed, airfares were the only weak component, according to Michael Pearce, senior U.S. economist at Capital Economics.


US inflation figures published by the Labor Department come out at 8:30 a.m. ET.

The stock market sell-off earlier this month that caused the Dow to fall over 1,000 points in a single day began after a Labor Department report showed wages grew at a better-than-expected pace in January.

Fed officials are looking for clues about whether or not wage growth will continue to accelerate, and eventually put upward pressure on consumer prices, as they contemplate raising interest rates several times this year under new Chairman Jerome Powell. Inflation is not a bad thing, but the markets have been so used to no inflation, that any signs of possible inflation result in speculation that the Federal Reserve will be forced to lift interest rates quicker than previously expected. But if inflation returns in force and the Fed hikes interest rates, it could cause Wall Street to redo the playbook.

European stock benchmarks also turned abound to lose some of gains made in the run-up to the data.The Europe-wide Stoxx 600 had been up 0.8 per cent earlier on Wednesday, but the U.S. data crimped that gain to 0.2 per cent.

"Stock market valuations are high".

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