Markets Sell-Off on Hot Inflation, Bad Consumer Sentiment

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Markets were thrashed on Friday by a white-hot CPI print and also the lowest level for the University of Michigan Consumer Sentiment survey in the entire history of the indicator. Over the last year, Energy rose 34.6%, with gasoline even higher, and groceries jumped 12%, but the levels of inflation were pretty broad-based, even excluding these more volatile items. The print definitely make it a lot less likely that any doves will be taking flight at the Fed soon. Some market commentators even speculated the 75 bps hikes were back on the table for the Fed meeting next week in the wake of the concerning report. You can see below where the biggest increases were:

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There were increases across the board. Apparel had a big rise and new and used car prices both continued to increase. Shelter also contributed a hefty portion to the MoM increases. There was a 0.6% increase in OER and rent prices. We’ve long mentioned this area of CPI can be stickier and more problematic because of its prominence in the average consumer’s wallet. There is also a massive travel boom under way. The cost of airline tickets has risen 48% in the last three months. Some had been expecting a mixed report showing progress in some areas mitigated by the hefty contributions of Food and En...
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