Investors were evaluating a less-than-straightforward take on U.S. inflation Wednesday, with August’s consumer price index coming in close to or in line with expectations while providing reasons for the Federal Reserve to hike again by year-end.
Still, Ed Moya, a senior market analyst for the Americas at OANDA Corp. in New York, said “this was a complicated inflation report,” considering price gains are failing to ease by enough for the central bank to abandon its hawkish stance. Core readings which matter most to Fed policy makers came in slightly above expectations at 0.3% for last month, driven partly by a jump in airline fares, as the annual core rate slipped to 4.3% from 4.7% previously.
While August’s CPI report failed to move the needle in stocks, Treasurys or fed funds futures, there was one corner of the financial market where it did make a difference: Traders of derivatives-like instruments known as fixings now foresee five more 3%-plus annual headline CPI readings starting in September, after adjusting their expectations to include January.