Wall Street down, pays the key inflation data represented by the consumer price index which, in October, rose both on a monthly and on an annual basis well beyond expectations.
On a monthly basis, the index jumped by + 0.9%, more than the + 0.6% rise expected by the analyst consensus: on an annual basis, the trend was an increase of well + 6.2%, well above the + 5.8% forecast and + 5.4% in September, at the highest growth rate since 1990.
Core inflation, ie inflation without the more volatile components represented by energy and food prices, increased by 0.6%, compared to the estimated + 0.4% and after + 0.2% in September.
On an annual basis, core inflation advanced by 4.6%, compared to the + 4.3% expected, against + 4% in September.
At the start of the session on Wall Street, the Dow Jones index lost 0.09% to 36.285 points, the S&P 500 fell by 0.34% to 4.667 points, while the Nasdaq immediately fell -1% at 15.728 points.
Treasury rates are pointing upwards, with 10-year rates rising after 5 basis points to 1.48% and 30-year rates rising to 1.84%. Dollar rose, with the eur-usd ratio down about 0.27% to $ 1.1558.
So commented on the data Nancy Davis, founder of Quadratic Capital Management, according to reports from the CNBC: “The consumer price index showed another month with inflation well above the Federal Reserve’s target, mainly due to the continuous problems affecting supply and labor shortages. If inflation does not slow down, the Federal Reserve may have to continue tapering at a faster pace and raise interest rates, which could hurt equities and bonds “.
Another crucial indicator was published on the eve of monitoring the trend of inflationary pressures: the producer price index, which in October jumped by 8.6% on an annual basis: less than the expected + 8.7%, but still always at a record pace in nearly 11 years.
And inflation also worries China: today Beijing published the consumer price index for October. The figure jumped 1.5% year-on-year, at the strongest pace since September 2020, compared to the + 0.7% expected by the consensus and after the previous zero change. On a monthly basis, the increase was + 0.7%. The National Bureau of Statistics of China pointed out that the index was affected by some factors, including the demand for commodities, weather conditions, costs.
Boom also for Chinese inflation measured by the producer price index, which jumped by 13.5%, to a record since the Beijing authorities started collecting the data in October 1996.
And it is an inflation alert all over the world, as evidenced by the thud of real rates on government bonds of various economies.
In the United States, in particular, with inflation expectations rising and nominal rates falling, real yields on US Treasuries have slipped even further below zero this week. In particular, the rate on 30-year TIPS – or securities that protect against inflation with a 30-year maturity – fell yesterday to a record low, around -0.60%. Ten-year TIPS rates fell to -1.2%.
The consequence was the widening of the gap between these rates and the 10-year Treasury rates: this differential, a parameter of inflation expectations known as the break-even rate, increased from around 2% at the beginning of January to 2.64% , confirming how the fear of inflation is getting stronger, despite the reassurances on its transitory nature that come from the Fed of Jerome Powell and, in the rest of the world, also from the ECB of Christine Lagarde.
From the US macroeconomic front, the data relating to the initial requests for unemployment benefits was also published today which, in the week ending last November 6, fell by 4,000 units to 267,000. The figure was slightly worse than the expected 257,000, still down from the 271,000 of the previous week (revised up from the 269,000 units initially disclosed), and to the new lowest level since March 14, 2020.
The four-week moving average has fallen to 278,000 from the previous 285,250, again to a record low since March 14, 2020. The number of American workers continuing to receive unemployment benefits has risen by 59,000. to 2,160 million.
Among the titles protagonists of today’s session Tesla, recovering from the thud equal to -12% of yesterday. The stock falls by more than 2%.
In two sessions, Tesla lost nearly $ 200 billion in value. Musk’s Twitter survey asking if he should sell 10% of his stake was followed by news of his brother Kimbal Musk selling some shares last week. Yesterday came the lunge of Michael Burry accusing Elon Musk of wanting to sell shares to cover personal debts.
Focus also on DoorDash, Wall Street’s third-largest IPO in 2020, which announced it has reached an agreement to buy rival food delivery platform Wolt, with a transaction valued at $ 8.1 billion that will take place entirely in shares.
With the acquisition, Doordash aims to expand its international growth. The stock jumped by more than 24% in afterhours trading and advanced by more than 10% at the start of the session.