Germany's Inflation Steady At 1.8%

14 October, 2017, 02:06 | Author: Leticia Walters
  • Wall St closes lower as banks and media companies weigh

Treasury yields slipped on Friday after muted underlying US inflation data offset higher gasoline prices and strong retail sales while the USA dollar regained ground lost earlier in the day but was still set for its worst week in five.

The mixed report from the US Labour Department yesterday comes as Federal Reserve officials have been engaged in a vigorous debate on the inflation path and suggests a December interest rate increase is not a done deal.

A surge in energy prices in the aftermath of Hurricane Harvey pushed USA inflation rate in September to an eight-month high, while the core inflation less food and energy remained muted, according to a report released by Labor Department on Friday. "It's less of a headwind for the stock market". Sterling was last trading at $1.3261, up 0.30 percent on the day.

USA retail sales rose in September, overcoming the negative impact in the previous month from Hurricanes Harvey and Irma.

Scott Clemons, chief investment strategist for Brown Brothers Harriman in NY said that "after a long stretch of consecutive highs in the market, with earnings, even if they are slightly disappointing" that is an excuse to sell off. "You've multiple levers here in multiple sectors".

The Trump administration is seeking to use talks on renegotiating NAFTA, the North American Free Trade Agreement, to propose automotive content rules that require the use of North American-made steel, aluminum, copper and plastic resins, according to a Reuters report.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan reached its highest point since late 2007, ending up 0.7 percent on the day.

"There is really no fig leaf to cover up this notion that inflation is weak, and it's weak in a very broad sense", said Aaron Kohli, an interest rate strategist at BMO Capital Markets in NY.

MSCI's gauge of stock markets across the globe gained 0.06 percent, buoyed gains in Asian markets.

Bitcoin smashed through the $5,000 barrier for the first time and was last up 10 percent on the day.

Against the euro, the dollar fell 0.3% to $1.1864 and was 0.4% lower versus the pound at $1.3315.

The harmonized index of consumer prices in September 2017 compared to August 2017 was 99.8%, i.e. the monthly inflation was -0.2%.

Meanwhile, the monthly rise in auto sales was 3.6% in September, with unit sales reaching a 12-year high, and sales of building materials and garden equipment were up 2.1% on the month. "The Fed has pointed to inflation bouncing back and there is no data to support that at the moment".

U.S. Treasury prices gained after the Treasury Department saw strong demand for a sale of 30-year bonds.

USA crude fell 1.72 percent to $50.42 per barrel and Brent was last at $56.00, down 1.65 percent on the day.

Spot gold added 0.1 percent to $1,293.37 an ounce.

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