This week’s inflation data announcements include today’s release of the consumer price index for August and the producer price data on Thursday. The latest US CPI data for August 2024 are set to be released on September 11, 2024, at 8:30 a.m. Eastern Time, and will remain a focus for global markets.
Any decline in August’s inflation figures will be welcomed positively by the market. The market and Fed officials generally agree that inflation is trending downward and no longer poses a threat to the central bank’s intention to begin reducing interest rates.
A spike in core inflation could potentially derail the Fed’s rate cut plan and potentially spook markets if there is a negative surprise in US CPI data for August.
With the US CPI decreasing to 2.9% in July and the unemployment rate largely remaining unchanged from 4.3% in July to 4.2% in August, the markets believe it is time for the US Fed to begin cutting interest rates. A higher for longer interest rate scenario may start impacting the economy negatively.
US Fed’s FOMC meeting is next week on September 17-18 and the expectations of a 0.25% rate cut are high. Investors predict a 100% chance of policymakers cutting interest rates, with 70% odds of a quarter of a point cut, according to CME’s FedWatch tool.
Stocks are up this year on the expectations that interest rates are most likely to come down bringing a relief to businesses and the economy. Backed by the euphoria in AI and tech stocks, the leading indices are keeping investors’ portfolio in green before the November election fever kicks in.
DOW 30 Index is up by 8.33% YTD and 17.79% over the last 12 months.
S&P 500 Index is up by 14.70% YTD and 21.92% over the last 12 months.
Nasdaq 100 Index is up by 10.90% YTD and 20.69% over the last 12 months.
September has historically been a challenging month for tech stocks, with rate cuts and upcoming US elections causing volatility in the coming weeks.