Investors rejoiced on October 13th as the Consumer Price Index (CPI) was reported to have surged by the highest amount in months. The news of rising consumer prices have been long-awaited following a summer of lull in markets, and the subsequent positive movement has caused stocks and bonds around the globe to soar.
The CPI rose 0.3% in September, according to the U.S. Department of Labor. This increase signifies an improvement over August’s 0.2% growth, and is the fastest rate of growth since April’s 0.4%. The report further indicated that the cost of goods had accelerated by 0.4%, driven mostly by higher prices for new vehicles, health care, and home utilities.
Equity markets have responded positively to the news, with even the U.S.’s volatile Dow Jones Industrial Average taking a significant step up. Stocks globally experienced similar trends in response to the CPI announcement, with major international indices such as Japan’s Nikkei 225 stock market compromising a significant portion of the gains.
In addition, bond markets seemed to be cautiously optimistic, with longer-dated bonds rising to their highest level since June. While investors may be wary of the potential risks posed by higher inflation, the overall sentiment remains that higher consumer prices means increased consumer spending on goods, which is beneficial to the struggling global economy.
The positive movement in the markets following the large surge in the CPI reinforces the notion that positive economic news is essential for investors. With consumer prices rising increasingly faster, the global economy is poised for considerable growth in the months to come.
Release “October CPI Release Makes Stocks & Bonds Skyrocket!
