Tuesday, 17 July, 2018

US Consumer Prices Rise 0.5% In September, Slightly Less Than Expected

Traders work on the floor of the NYSE in New York Traders work on the floor of the New York Stock Exchange in New York U.S
Nellie Chapman | 14 October, 2017, 00:25

Treasury yields slipped on Friday after muted underlying US inflation data offset higher gasoline prices and strong retail sales while the USA dollar regained ground lost earlier in the day but was still set for its worst week in five.

However, stripping out the rise in energy and weather impact, underlying inflation and sales failed to pack the punch many had expected and the dollar fell on reduced expectations of a December rate hike.

The consumer price index in September 2017 compared to August 2017 was 100.2%, i.e. the monthly inflation was 0.2%, according to data of the National Statistical Institute.

After four straight days of declines, the dollar index, tracking the greenback against a basket of major currencies, rose 0.07 percent.

"There is really no fig leaf to cover up this notion that inflation is weak, and it's weak in a very broad sense", said Aaron Kohli, an interest rate strategist at BMO Capital Markets in NY.

Oil prices closed at their highest level in October on bullish news from strong Chinese oil imports and after U.S. President Donald Trump decided not to certify Iran compliance with a nuclear agreement. The so-called core CPI rose 0.2 per cent in August.

In U.S. stocks, banks and media companies were the biggest drags on the S&P 500 as AT&T Inc fueled concerns about video subscribers and investors took fright at comments from JPMorgan and Citigroup on consumer debt.

Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan hit a roughly 10-year high.

Meanwhile, the monthly rise in auto sales was 3.6% in September, with unit sales reaching a 12-year high, and sales of building materials and garden equipment were up 2.1% on the month.

"People got a little bit spoiled by the very nice advances we saw in the first and second quarter, but keep in mind that earnings started perking up in the third quarter of last year so the year-over-year comparisons might not look as robust", said John Carey, portfolio manager at Pioneer Investment Management in Boston.

Sterling last traded at $1.3273, up 0.39 percent on the day.

The U.S. dollar index fell 0.14 percent, with the euro up 0.16 percent to $1.1848.

Policymakers could, however, find solace from another report indicating that the United States economy was swiftly recovering from the damage inflicted by Hurricanes Harvey and Irma, with a strong rebound in retail sales last month.

Spot gold was almost unchanged at $1,293.76 an ounce at 0054 GMT after gaining for five straight sessions.