"Bad News for the Fed": New Inflation Data Sent U.S. Stock and Bond Markets Plummeting

The S&P 500 and the Nasdaq Composite fell on October 14 following the release of the latest inflation data —although the new macroeconomic figures only slightly exceeded economists’ forecasts, according to Bloomberg, the rate of price growth in the U.S. accelerated in September to a five-month high.

Against this backdrop, the broad U.S. stock index, the S&P 500, fell 0.4% in the first minutes of trading, the tech-heavy Nasdaq Composite lost 0.5%, and the Dow Jones Industrial Average also opened in the red but then recovered from its losses and, at the time of publication, is up a modest 0.19%.

A sell-off also began in the U.S. government bond market: the yield on 10-year Treasuries—a key benchmark for mortgages, auto loans, and credit card debt—jumped 10 basis points on October 14, to 5.323%. This is the highest level since October 8, according to CNBC. For 30-year Treasuries, the yield rose by 5 basis points to 5.61%. The yield on 2-year Treasury notes, which is closely tied to the Fed’s interest rate decisions, reached 4.94%, its highest level since September 29, the network notes. Yields and prices of government bonds move in opposite directions: when the price of Treasuries rises, their yield falls—and vice versa.

The Consumer Price Index rose 3.7% year-over-year in September, exceeding the Dow Jones consensus forecast of 3.6%. Core inflation, which excludes food and energy prices, stood at 2.5%.

“The September inflation data is bad news for the Fed,” commented Pimco economist Tiffany Wilding on the latest macroeconomic data, according to MarketWatch. Following the release, a potential rate hike at the Fed’s meeting in two weeks’ time is once again on the agenda, she noted.

This article is being updated

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