Video summary
The trading week concluded with a significant release of Consumer Price Index data that heavily influenced market sentiment ahead of the Federal Reserve's upcoming meeting. The headline core monthly CPI figure for August came in at 0.3%, which was notably higher than the expected 2.0% and signaled persistent inflationary pressure. This hot economic data shifted market expectations dramatically, as investors now price in an 86% probability that the Fed will raise interest rates by 75 basis points on September 16th. Consequently, the market has moved from a previously uncertain outlook to one where a rate hike is considered highly likely, setting the stage for increased volatility as the central bank prepares to address these elevated inflation numbers in just five days.
The reaction to this data was immediate and complex, characterized by a classic "sell the rumor, buy the news" dynamic that left markets digesting the implications of such a high inflation print. While the initial spike in yields pushed the ten-year Treasury rate up to nearly 5%, the broader market response has been mixed, with crude oil prices complicating the scenario after hitting $104 last night. Despite the strong yield environment which theoretically should support a stronger dollar, the dollar index has struggled to find significant upward momentum, currently hovering around 99.11. This divergence highlights the current market's hesitation, as investors seem reluctant to bid up the currency even in the face of aggressive rate hike expectations and rising bond yields.
In the precious metals sector, gold experienced a volatile session following the CPI release, initially spiking down to lows near $4333 before recovering by more than $100 to trade around $4440. Although it has since given back some of those gains and is currently sitting at approximately $4392, the metal remains a key focus for investors seeking alternatives in this high-inflation environment. The gold miners ETF, GDX, also showed resilience today, gaining 70 cents despite taking a hit yesterday as much of the market's reaction to the CPI data was already priced in. Overall, the S&P 500 managed to close positive by about 9/10%, reflecting a cautious but ultimately resilient stance as traders continue to assess the full impact of the latest economic indicators on their portfolios.
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Good Friday afternoon everybody. Tommy
O'Brien coming to you live from TFN.
Thanks for kicking off the final hour of
the trading week with me on the Tom
O'Brien show. And we kick things off
quite a CPI Friday. So we get a print
this morning and the market. A little
bit of a story of sell the rumor buy the
news as in we get a CPI print folks. Why
not we kick it off with a headline?
Okay. That Yeah.
You get a hot CPI. The Fed meets in 5
days and the number that was most
important was the core monthly CPI this
morning. And that number which excludes
food and energy came in at.3% for the
month. The expectation was 2%. Okay? And
that's for the month of August. And
that's a hot number. And right now
you're talking about a Fed where they're
talking about talking about they're
pricing in right now the expectations
for a hike. Yeah. How about it? Remember
we were saying earlier in the week that
we were at about a 50/50 and by Friday
morning this was going to be heavily
tilted in one way or the other. It's a
hike folks. 86% probability right now
priced into swaps that the Fed's going
to hike September 16th. So that's the
backdrop. But pretty remarkably
you jump over to yields now things have
reverberated but you do go a little bit
lower price higher yield but this market
gave it back initially now we have crude
complicating the scenario right now okay
crude hits 104 last night you come into
that 830 number at 99 we're back above
100 right now but you got a yield right
now in the 10ear let's pull it up
exactly I think we're pushing about 4.93
Three. What are we at? No. 4.97. No,
four. We just ticked a 4.98.
We might hit 5% by the time I get off
the air, folks. Your 10ear sit at 4.98
right now. You jump over the dollar
index. 9911. All things considered,
still can't catch any type of a
remarkable bid. Okay. With what's
happening with yields right now, the
dollar should be much stronger.
But no one wants dollars right now. Even
in the face of a 5% tenure, you jump
over to gold.
Initially on a hot CPI print, you hit
gold spike to lows of 4333.
You trade up more than $100 to 4440, but
it's given back some of those gains.
Gold trading at 4392. You got the GDX.
GDX positive today, up by 70 pennies,
but taking it on the chin yesterday. A
lot of this got priced in yesterday,
folks. Market digesting that CPI print.
S&Ps up 9/10%.