Core Inflation Hits 29-Year High; Dow Futures, Treasury Yields Rise - Investor's Business Daily

Inflation data for May came in hotter than Wall Street expected, with core inflation at a 29-year high.but the Dow Jones jumped out to a strong gain, while the S&P 500 hit a new record. Treasury yields eased after the CPI report.

X

The consumer price index, or CPI, rose 0.6% from the prior month and 5% from a year ago, the Labor Department said Thursday. The annual inflation rate was the high since August 2008.

The core CPI, which strips out volatile food and energy categories, rose 0.7% from April. The 3.8% core inflation reading was the strongest since June 1992.

Economists were looking for 0.4% increases in both the overall and core CPI.

Prices for used cars and trucks, new vehicles, household furnishings, air travel and apparel all continued their recent surge.

Supply constraints and high demand, fueled by the fading Covid threat and fiscal stimulus, have combined to stir up the biggest broad-based inflation rise in a generation. Yet financial markets seem to be buying the Federal Reserve's assurance that the rise in inflation will prove transitory.

Dow Jones, Treasury Yields Reaction To CPI Report

The Dow Jones, S&P 500 and Nasdaq all rose about 0.7% in early Thursday stock market action. Ahead of the data, the Dow and S&P 500 pointed to modest gains, while Nasdaq 100 futures had showed a modest loss.

The S&P 500 traded around 4,247 mid-morning, eclipsing its prior 4,238 record.

The 10-year Treasury yield initially rose 3 basis points to 1.52% after the inflation data. But stocks strengthened as Treasury yields fell back below 1.5%. Despite all the focus on higher inflation, the 10-year yield finished near a 3-month low on Wednesday.

The next Fed meeting is on June 15-16. A key question is whether policymakers will begin to talk about tapering asset purchases. Any actual tapering of bond buys likely wouldn't begin for several months.

CPI Inflation Report Details

Prices for used cars and trucks followed April's historic 10% jump with an additional 7.3% gain in May. Demand for used cars has gotten a boost amid the global chip shortage that has snagged production for new autos.

Meanwhile, car and truck rental prices rose 12.1%, while new vehicle prices increased 1.6%.

Airline fares rose 7% on the month, following April's 10.2% rise, as vaccines enable an uplift in travel demand.

Industries that are struggling to keep up with demand and facing increases in their own input costs, including labor costs,  appear to be passing along price hikes.

Prices for food consumed away from home rise 0.6% on the month, topping the 0.4% rise for food consumed at home.

Chipotle Mexican Grill (CMG), which recently hiked its average wage to $15 an hour, said this week that it is passing a 4% price hike to consumers.

YOU MAY ALSO LIKE:

Why This IBD Tool Simplifies The Search For Top Stocks

Catch The Next Big Winning Stock With MarketSmith

Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader

Best Growth Stocks To Buy And Watch

IBD Digital: Unlock IBD's Premium Stock Lists, Tools And Analysis Today

Adblock test (Why?)

Article From & Read More ( Core Inflation Hits 29-Year High; Dow Futures, Treasury Yields Rise - Investor's Business Daily )
https://ift.tt/3ga5JBK
Business

Bagikan Berita Ini