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US inflation hits sentiment

Treasury yields soared, stocks cratered, and the US dollar jumped after the monthly CPI release, which showed core month-over-month inflation rising to 0.6% from 0.3%, with the annual rate up to 6.3% from 5.9%. The annual rate may have declined a touch to 8.3% from 8.5% as energy prices declined, but there is a clear sense that it’s broader and stickier than anyone would care for.

Wall Street smashed

The S&P 500 cash equity market closed just about at the session low at 3,932, down 4.32%. The Nasdaq 100 shed 5% as heavyweight tech names were smashed by the jump in yields. Apple declined almost 6%, with Amazon off 7%. Just five stocks on the S&P 500 were green for the day.

UK inflation

UK inflation data displays similar signs to the US – today’s headline rate declined from double-digits in July to 9.9%, but the core reading ticked up a touched. Gilts were offered, with the policy-sensitive 2yr UK bond yield up to 3.15%.

European stocks down

Selling caught European markets too as the US session opened and there were broad losses across the major bourses which are extending to further declines this morning of around 0.5% or so. Selling on the FTSE 100 ran out of steam around the 7,320 area, the intraday highs from a week ago and 50% retracement of the September rally. Looking for this area to hold or we look to the next level of support around 7,275.

OPEC worried

OPEC said the oil market is a bit broken. “The paper and physical markets have become increasingly more disconnected,” the cartel noted in its monthly report. This chimes with the view that the unwinding of a lot of speculative long positions over recent weeks has not really reflected the intensely tight fundamentals within the market. Crude prices are a little weaker, trending lower within the channel.

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