Friends
6.2%. That was the year over year rise in inflation that today’s CPI number revealed. It is the largest increase in inflation that we have seen in more than 30 years. Month over month, the index rose .9% which was more than had been expected. Bonds, which had been rallying in recent trading sessions (rates lower) sold off not unexpectedly and stocks too experienced selling pressure.
By the close, the Dow Jones Industrial Average was down 240 points to finish the day at 36,079. The S&P 500 was down 38 points to close at 4,646. The Nasdaq Composite Index was down 263 points to close at 15,622. Gold was up $20 to trade at $1,851 per ounce, while oil was down $2.92 to trade at $81.23 per barrel WTI.
It will be interesting to see where interest rates go from here. We are simply back to the levels we were at before the Fed meeting a week ago. Rates had surprisingly moved lower and now are back near 1.56% on the 10 year Treasury Note. All year pundits have been calling for the 10 year note to move to 2% or above by year end and up until now the bond bulls have been able to thwart that move. Will we finally see interest rates move higher (remember the Fed Funds rate is still virtually at 0% and that isn’t likely to change until sometime next year)? And, if rates finally do move higher, how are stocks affected? Questions that will soon be answered. Stay tuned.
Have a nice evening everyone.
