United States Inflation Rate Accelerates in August

News Event

From Trading Economics: Consumer prices in the United States went up 1.1 percent year-on-year in August of 2016, higher than 0.8 percent in July and above market forecasts of a 1 percent gain. It is the highest inflation rate in four months, boosted by rising shelter and medical cost. Inflation Rate in the United States averaged 3.29 percent from 1914 until 2016, reaching an all time high of 23.70 percent in June of 1920 and a record low of -15.80 percent in June of 1921. Inflation Rate in the United States is reported by the U.S. Bureau of Labor Statistics.

Market Closing Wrap

In European Equity Markets stocks fell on Friday and headed for their worst weekly performance in three months, with Deutsche Bank dragging financial services down after it said the U.S. government was seeking billions of dollars to settle a mortgages case. The STOXX Europe 600 index fell 0.3 percent. Shares in Deutsche Bank fell 7.3 percent after Germany's flagship bank said the U.S. Department of Justice was asking it to pay $14 billion to settle an investigation of its sales of mortgage-backed securities. Other financial stocks also came under pressure. The European banking index fell 1.4 percent, dragged down by 2.2 to 4.1 percent declines for shares of Royal Bank of Scotland, Credit Suisse and UBS.

In Currency Markets the U.S. dollar hit a more than two-week high against a basket of major currencies on Friday after U.S. inflation data boosted bets on a faster pace of Federal Reserve interest rate increases, while uncertainty ahead of a Bank of Japan (BOJ) meeting limited the dollar's gains against the yen. The euro hit a 10-day low against the dollar of $1.1161, while the dollar hit a 10-day high against the Swiss franc  of 0.9794 franc. The dollar was last up just 0.11 percent against the yen at 102.21 yen head of the BOJ's Sept. 20-21 policy meeting. The dollar index, which measures the greenback against a basket of six other major currencies, rose 0.7 percent to 95.988.

In Commodities Markets  crude oil prices fell more than 1 percent on Friday to multi-week lows as swelling Iranian exports reinforced fears of a global glut, while gasoline rallied on refinery and pipeline outages.  Brent crude futures were down 1 percent, at $46.09 a barrel. At the session low, they hit $45.48, a two-week bottom. U.S. West Texas Intermediate crude futures fell 1.6 percent, to $43.21 a barrel. WTI hit a five-week low of $42.74 earlier. Brent was on track to a weekly loss of 4 percent and WTI a loss of 6 percent. Spot gold slid to its lowest since Sept. 1 in the wake of the data at $1,306.38, and was last down 0.5 percent at $1,307.36 an ounce. Silver was down 1 percent at $18.75 an ounce.

In US Equity Markets stocks were near session lows late on Friday morning as Oracle led a decline in tech stocks and financials came under pressure in the wake of Deutsche Bank's mammoth $14 billion fine. The Dow Jones Industrial Average  was down 0.4 percent, at 18,139.86. The S&P 500 lost 0.47 percent, at 2,137.25 and the Nasdaq Composite fell 0.27 percent, at 5,235.50. Oracle lost 3.9 percent and pulled down other technology stocks after the company issued a disappointing quarterly profit. Also weighing was a 0.5 percent fall in Apple,  that was set to snap a four-day winning streak, as Asia gave the iPhone 7 a subdued welcome. Helping limit losses was Intel's 2.5 percent gain after the chipmaker raised its third-quarter revenue forecast.

In Bond Markets U.S. Treasury yields rose on Friday after data showed that U.S. consumer prices increased more than expected in August, raising the odds that the Federal Reserve will raise rates later this year. The Labor Department said its Consumer Price Index rose 0.2 percent last month after being unchanged in July. Benchmark 10-year notes were last up 4/32 in price to yield 1.69 percent, after trading at 1.67 percent before the data. The yield curve between five-year note yields and 30-year bond yields flattened to 125.60 basis points, after reaching its steepest levels in two-and-a-half months on Thursday at 130 basis points.

Source: Institute of Trading and Portfolio Management