U.S. Inflation Stalls – Stocks Soar!

Last Updated: 16. November 2023By

This week, important inflation data featured on the calendar with US consumer prices on Tuesday and US producer prices on Wednesday, expected to provide market movements in terms of investors‘ rate expectations.

US Inflation Stops – Stocks Soar! The US consumer price inflation data for October on Tuesday was especially well-received by the markets. For the first time since July 2022, US consumer prices have not risen from the previous month. In other words, inflation has stopped – at least for the moment.

The year-on-year inflation rate also dropped significantly. Prices compared to the same month last year increased by only 3.2%, compared to 3.7% in the previous month of September. Analysts had expected a slightly higher rate of 3.3%.

US investors are sure: High interest rates are behind us. This means that the US Federal Reserve has no more arguments for a further rate hike. Recently, US Federal Reserve Chairman Jerome Powell had stressed that the US Federal Reserve still adheres to the 2% inflation target.

However, the apparently achieved high interest rate will only remain if the achieved interest rate is sufficient to lower inflation back below this threshold in the medium term. Whether this is actually the case will only be seen in the coming months.

But the markets have already clearly positioned themselves: the high interest rates are definitely behind us. Markets are usually right. The markets jumped up in relief at this realization! But are they right? If not, there could be a crash in the markets.