Harvest Global Markets :

One of the most important inflation data is Consumer Price Index (CPI) that describes the variation in prices of goods and services for the end users in the economy, its latest release for the month of September from Bureau of Labor Statistics is the most anticipated economic data for FED to pursue its aggressive interest rate hikes to slow down the soaring inflation, which has already crossed the last 40-year record. The FED is adamant on rising interest rates and then keeping them there until their target inflation of 2% is achieved.

The Labor Department (BLS) on Thursday is expected to report that the core consumer price index (CPI) to accelerate a year-on-year pace of 6.5% in September against August’s 6.3%. This “core” inflation rate strips out the impact of volatile food and energy prices; the “headline” CPI, which includes food and energy items, is already running hot above 8%.

Recent Inflation has grabbed everyone’s attention especially FED has a lot to reliance on US Inflation data which will determine its future strategy. This would also affect the stock and bond market. It is noticeable that FED has become proactive since post pandemic to control inflation. Hence, it has been observed that speed of FED rate hikes has never been that rapid in the last 30 years as it observed in this year 2022 starting from March till to date has increased rates by 300 basis points.

The latest economic outlook release from the International Monetary Fund indicates a contraction in US GDP by 1.1% considering the probability of recession to be prolonged due to an aggressive monetary policy contraction. Traders around the globe are keeping a close watch on the today’s CPI release scheduled at 1730 HRS PKT as their economic developments are highly reliant on the dollar, the world’s largest reserve currency.

On the other hand, the rate of mortgage has surged above 6.5% to a 16-year high from less than 3% one year ago. The result has been a slowdown in home buying and construction and softer sales of home furnishings.

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