Traders Buy Stocks And Gold After CPI Report

Vladimir Zernov
Published: Nov 14, 2023, 14:42 GMT+00:00

Markets prepare for the end of the rate hike cycle as inflation rate falls faster than expected.

Inflation Rate

In this article:

Key Insights

  • U.S. dollar tested multi-week lows as traders reacted to CPI data. 
  • Gold climbed back above the $1965 level as traders focused on weaker dollar and falling Treasury yields.
  • SP500 tested new highs above the 4475 level. 

On November 14, U.S. released inflation reports for October. Inflation Rate declined from 3.7% in September to 3.2% in October, compared to analyst consensus of 3.3%. Core Inflation Rate decreased from 4.1% to 4%, while analysts expected that it would remain unchanged at 4.1%.

FedWatch Tool indicates that there is a 99.8% probability that Fed will leave the interest rate unchanged at the next meeting in December. Traders expect that Fed will start cutting rates in May 2024.

Treasury yields pulled back towards new lows after the release of inflation data. The yield of 10-year Treasuries moved below the 4.45% level, while the yield of 30-year Treasuries settled near 4.60%.

Falling Treasury yields put significant pressure on the U.S. dollar as traders have started to prepare for rate cuts in 2024. U.S. Dollar Index pulled back towards multi-week lows at 104.65.

Weaker dollar and lower Treasury yields provided material support to gold markets. Gold continued its rebound and climbed back above the $1960 level.

SP500 rallied as traders reacted to the reports. The end of the rate hike cycle is extremely bullish for stocks, so it’s not surprising to see that traders rushed to increase their long positions after the release of inflation data. Currently, SP500 is trying to settle above the resistance at 4475.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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