Inflation weighs on yields, dollar; stocks lackluster

Ivan Schwartz
October 15, 2017

Consumer prices advanced 1.8 percent year-on-year in September, the same rate as seen in August.

US crude fell 1.29 percent to $50.64 per barrel and Brent was last at $56.30, down 1.12 percent.

The head of the European Central Bank defended a pledge to keep interest rates at rock bottom on Thursday, batting back German calls for a speedy exit from years of easy money in the euro zone.

While investors cheered an increase in the USA producer price index (PPI) for last month, inflation concerns were still in focus ahead of consumer price index (CPI) data on Friday after Federal Reserve minutes showed a more guarded view.

Oil prices firmed on Friday as bullish news from strong Chinese oil imports to turmoil in the Middle East put Brent on track for a almost 2.8 percent weekly gain.

After four straight days of declines, the dollar index, tracking the greenback against a basket of major currencies, rose 0.15 percent.

Gasoline prices surged 13.1 percent last month, accounting for 75 percent of the increase in the CPI.

The annual average inflation, measured by CPI, in the last 12 months (October 2016 - September 2017) compared to the previous 12 months (October 2015 - September 2016) was 1.3%.

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The 30-year bond last /32 in price to yield 2.8761 percent, from 2.876 percent late on Wednesday.

The most active gold contract for December delivery went up 8.10 dollars, or 0.62 percent, to close at 1,304.60 dollars per ounce. The increase in the CPI was broadly in line with economists' expectations.

Excluding food and energy prices, core consumer prices inched up by 0.1% in September after edging up by 0.2% in August. The core PCE has consistently undershot the United States central bank's 2 percent target for more than five years.

"Many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent", said the Minutes of the Fed's September 19-20 meeting published on Wednesday. Owners' equivalent rent of primary residence rose 0.2 percent after advancing 0.3 percent in August.

Sterling last traded at $1.3273, up 0.39 percent on the day.

There were also decreases in the cost of medical care, apparel, and household furnishings.

The pan-European FTSEurofirst 300 index rose 0.01 percent and MSCI's gauge of stocks across the globe gained 0.04 percent.

In a separate report on Friday, the Commerce Department said retail sales jumped 1.6 percent in September likely as reconstruction and clean-up efforts in areas devastated by Harvey and Irma boosted demand for building materials and motor vehicles.

Other reports by GizPress

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