One Step Closer to FED’s Tapering with US Inflation Number Breaking Market Expectations

U.S. CPI matched two decades high implying FED to give indication on tapering timeline in tonight's meeting minutes

U.S. consumer price index (CPI) in September rose year-on-year underscoring much talked inflationary pressure also signaling robust economic growth than expected.

Headline CPI rose 0.4% while core CPI rose 0.2% compared to a month earlier. Compared on year basis headline CPI rose 5.4% matching the largest annual gain in 2008 and 1990 and core cpi rose 4.1%.

Bottlenecked supply chain and spiking energy prices lead to various consumer end prices to increase reflected in the CPI numbers which comes to a surprise to the earlier anticipation of economist and the federal reserve as well.

The CPI numbers brings FED tapering one step closer with traders eyeing tonight’s FOMC meeting minutes and initial jobless claims tonight to form clear consensus on tapering.

FED fund future after CPI data showed 90% likelihood of a rate hike by September 2022.

Longer term treasuries including 30-year bond auction saw strong demand while yield of 10 year bond saw a steady hold.

U.S. equites and futures rallied last night and Asian stocks ride on optimism this morning. MSCI Asia Index and MSCI Ex Japan inched up by 0.28% and 0.60% respectively.  Philippines, Indonesia and South Korea’s indices leading gains in the region.

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