Trump's Tariffs: Rising Prices and Hidden Costs for Consumers
The impact of Trump's tariffs is beginning to be reflected in rising US consumer prices, indicating a potential increase in inflation due to trade policy changes.
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Us Consumer Prices
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US Consumer Inflation Eases as Rental Costs Remain High
US consumer prices unexpectedly rose in November, driven by increases in rents and healthcare costs, while gasoline prices declined. The consumer price index (CPI) increased 0.1% last month, with a year-on-year increase of 3.1%. Core CPI, which excludes food and energy, rose 0.3% and increased 4.0% on a year-on-year basis. The slightly firmer inflation readings, along with strong job gains, suggest that the Federal Reserve is unlikely to cut interest rates early next year. Inflation remains above the Fed's 2% target, but economists expect cooler readings in the coming year.
"Asia Markets Surge as Investors Anticipate US Inflation Data"
Asian markets opened higher as investors await the release of the US consumer inflation report, which will set the tone for the Federal Reserve's final meeting of the year. Tokyo's Nikkei 225 rose 0.5%, while Hong Kong's Hang Seng gained 1.1%. Chinese leaders are holding an annual economic conference, and the S&P 500 closed at its highest level in 20 months. Cigna surged after announcing a $10 billion stock buyback, and Macy's jumped following reports of a bid to take the retailer private. Analysts expect the inflation report to show a continued slowdown, and Wall Street predicts the Fed will keep interest rates steady.
Asia Stocks Tumble on Rate Concerns and Global Market Volatility
Asian shares experienced a significant decline on Friday, heading for their largest one-day percentage drop in a week, following stronger-than-expected US consumer prices data that reinforced expectations of the Federal Reserve maintaining higher interest rates for a longer period. The MSCI Asia-Pacific index fell 1.2%, although it is still on track for a weekly gain of 1.4%. European markets were also expected to open lower. The US inflation report, along with weak demand for US 30-year bonds, pushed Treasury yields higher. The data highlighted the challenges the Fed faces in bringing inflation down to its 2% target.
US Consumer Prices Rise as Rents Surge and Inflation Remains Low
US consumer prices increased in September, driven by a surprise surge in rental costs, but underlying inflation pressures remained moderate, supporting expectations that the Federal Reserve would not raise interest rates next month. The consumer price index rose 0.4% last month, with shelter costs accounting for more than half of the increase. However, the annual increase in consumer prices excluding food and energy components was the smallest in two years. With the labor market still tight, reaching the Fed's 2% inflation target could be challenging, suggesting that interest rates may remain elevated for longer.
US Inflation Surges in August, Fueling Concerns for Consumers
US consumer prices rose by the most in 14 months in August, driven by a surge in gasoline prices. However, the annual increase in underlying inflation was the smallest in nearly two years, which may give the Federal Reserve reason to keep interest rates unchanged. The consumer price index (CPI) increased by 0.6% in August, in line with expectations. Gasoline prices accounted for more than half of the CPI increase. While annual inflation has picked up for the second consecutive month, it has come down from its peak in June. The cost of shelter continued to rise, but rents are moderating. Excluding food and energy, the core CPI increased by 0.3%.
Rising Hedging Costs Reignite Fear of Stock Market Dive
The fear of a stock market downturn is resurfacing as hedging costs rise. Options contracts betting on a 10% decline in the S&P 500 ETF are now 1.8 times more expensive than options that profit from a 10% rally. This indicates that investors are willing to pay more for protection ahead of key events such as the US consumer price reading and the Federal Reserve's interest-rate decision. While hedging has been a losing strategy in the face of a strong market, some traders are taking advantage of the current calm to acquire cheap protection against future volatility.
US Consumer Prices Show Modest Gains, But Inflation Remains Below Expectations
US consumer prices rose modestly in June, with the consumer price index (CPI) increasing by 0.2% and the core CPI (excluding food and energy) also gaining 0.2%. The year-on-year CPI climbed 3.0%, the smallest rise since March 2021, while the core CPI rose 4.8%, the smallest gain since October 2021. The slowdown in underlying inflation has led to speculation that the Federal Reserve may pause its interest rate hikes. However, inflation remains above the Fed's 2% target, and the labor market remains tight.