August’s CPI consolidates FOMC’s hawkish stance

Monthly U.S consumer prices unexpectedly rose in August as declining fuel prices were significantly erased by extra rent and food costs, giving sufficient grounds for the US central bank pursue its hawkish stance and accordingly to decide another interest rate increase next Wednesday.

The consumer price index gained 0.1% last month after being unchanged in July, the Labor Department said on Tuesday. Economists polled by Reuters had forecast the CPI dipping 0.1%.
In the 12 months through August, the CPI increased 8.3%, decelerating from July’s 8.5% rise. The annual CPI peaked at 9.1% in June, which was the biggest gain since November 1981.

The market reaction for stocks materialized with S&P 500 futures turned sharply lower, last down 2.2% The yield on 10-year Treasury notes rose and were up 8.3 basis points to 3.445%; The two-year U.S. Treasury yield, surged and was up 17 basis points at 3.741%, and on the forex front; the US Dollar Index rose 1.035%