Fed-obsessed traders take U.S. CPI numbers in stride

The S&P 500 fluctuated. Most megacaps gained, with the chiefs of five of the 10 biggest U.S. companies appearing at a closed-door Senate meeting to shape how artificial intelligence is regulated. Apple Inc. underperformed as China flagged security problems with iPhones. Citigroup Inc. climbed on plans to revamp its top management structure and a bullish outlook for fixed-income trading. American Airlines Group Inc.

The core consumer price index, which excludes food and energy costs, advanced 0.3 per cent from July, the first acceleration in six months. From a year ago, it increased 4.3 per cent — in line with estimates and marking the smallest advance in nearly two years. It’s still above the Fed’s two per cent goal.

“Not a great CPI report, but not something that changes the basic Fed outlook,” said Guha, the firm’s vice chairman. “This Fed is not itching to hike again and we think it would take significantly more to push the FOMC to actually deliver another increase — with our base case remaining the Fed is done here.

“We continue to expect some reduction in the number of participants projecting further hikes, but probably not enough to move the median projection of one more rate hike. That said, we believe that we have likely seen the last rate hike for this cycle, as the economic data that the Fed will see over the coming months will keep them on hold and allow the impact of 5.25 per cent of prior hikes to slow the economy and inflation.

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