Stock market's 2023 run may hit roadblock after August's energy-led boost to U.S. CPI

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Inflation traders now foresee five straight months of 3%-plus annual headline CPI figures, including August's.

August was a hot month and it wasn’t just about the weather. Financial markets are now bracing for what’s likely to be a rebound in headline U.S. inflation next week, fueled by higher energy prices.

Via phone on Friday, Pelle said that prospects for a hotter August CPI report have already been factored in by financial markets, with all three major U.S. stock indexes heading for weekly losses. In financial markets, there’s one group of traders which are telegraphing that the final mile of the road toward 2% inflation won’t be easy.

After stripping out volatile food and energy items, BofA Securities and Barclays expect August’s core CPI readings to come in at 0.2% month-over-month — matching June and July’s levels — and to fall to 4.3% on an annual basis.

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