Markets ignore a warmer-than-anticipated inflation report and instead of rotating their attention to the latest signs that the US manufacture market weakens a focus of focus that points to the growing concern about a deeper slowdown of the economy.
Consumer prices have increased a little more than expected in August, according to CPI data released Thursday by the US Bureau of Labor Statistics. Both the headline rate of 2.9% and the main rate of 3.1% remains stable higher than the 2% target of the Federal Reserve. Usually, suggests that the US central bank should stop in interest rate cuts.
But investors are partially fined in data and instead focus on what usually is the less followed weekly an unemployment claim from the Department of Labor. That data showed claims that climbed to 263,000 last week – the highest in nearly four years and up from 236,000 last week and 235,000 forecasts. That focus was shown in bond yields, with a 10-year-old yield of slides of five basic points below 4% for the first time since the April Tariff Panic Tanked Global Equity Markets.
Crypto markets initially sank faster than expected inflation data, but quickly rebuked as working data took place on stage. Bitcoin and Ether (Et) is only modest, but the larger action is in the altcoins, suggesting the type of animal spirits that may be associated with financial policy easier. Solana has risen 11% week-over-week to the highest level since January and Dogecoin 17% on weekly. XRP was preceded 6.6% in the past week and returned to the top of $ 3.
“The evidence of a slowing in the US is now appearing in tough data; it’s no longer just in sentiment surveys,” said Brian Coulton, chief economist at Fitch.
As for the real economy, the numbers are now offering a troubling glimpse into something that the US central bank is trying to avoid: stagflation. This economic condition, defined by the simultaneous emergence of high inflation and inertia, is rare and difficult to adjust. For policy manufacturers, this is a catch-22.
Cutting interest rates to stimulate inflation growth risks. But failure to ease the financial policy as the work situation deteriorates is not a better alternative.
So far, entrepreneurs have estimated that the Fed has leaning toward protecting the growth in inflation, with odds pointing to a rate cut next week as a close certainty. Today’s data, however, suggests that the balance is becoming more difficult to manage and the path ahead may be more complicated than the market is entering.
“It will be a rough few months in advance as tariffs affect their way through the economy,” Heather Long saysChief Economist at the Navy Federal Credit Union. “Americans will experience higher prices and (Likely) More disappearance. “
