new york oct 13 reuters  us consumer prices increased more than expected in september and underlying inflation pressures continued to build up reinforcing expectations that the federal reserve will deliver a fourth 75basis points interest rate hike next month the consumer price index rose 04 last month after gaining 01 in august the labor department said on thursday economists polled by reuters had forecast the cpi climbing 02 in the 12 months through september the cpi increased 82 after rising 83 in august the annual cpi peaked at 91 in june which was the biggest advance since november 1981 read more read more stocks sp 500 futures turned sharply lower and were down 20 bonds the yield on 10year treasury notes rose to a 14year high and was up 124 basis points at 4026 the twoyear us treasury yield surged to a 15year high and was up 183 basis points at 4470 “not good hello – market collapsing i’m not surprised – why is anyone surprised it is not responding it is clear the fed put us in this position they should’ve been more aggressive months ago but they weren’t and now they are going to be forced out probably in december to probably go another 75 basis points because the november cpi and ppi now that oil is up 22 this month next month that is going to be reflected in that number so cpi ppi is going to rear its ugly head even higher next month” “they are too late to the game and it is not working because inflation is becoming entrenched so i don’t think it is working right now those are high numbers the feds definitely raising by 75 bps next month and i would not be surprised if its 50 bps or 75 bps again in december basically this quarter is the start of a recession even though it may not show up in numbers until the first quarter all you have to do is look at housing stocks to know its coming with a 35 unemployment rate theres no way the fed is going to stop raising rates until after the end of the year anybody who says fed could pivot is wishful thinking right now the fed has got to get a handle on inflation right now soft landing is also becoming wishful thinking the more they raise rates were going to have a really soft maybe even negative fourth quarter a lot of what central bankers worry about is legacy for better or for worse no one wants to be arthur burns and everyone wants to be paul volker and j powell probably has the same feeling that he would much rather suffer through a year or two of pain by slowing the economy and getting inflation under control than not i think hes going to err on the side of overraising rates and slowing the economy more than he probably would otherwise do because he doesnt want a rerun of 1970s inflation they are worried about liquidity but look what its cost the yen because of the boj and when the boe intervened “that inflation report certainly sucked the enthusiasm out of the room we expected deflation in durables and nondurables which we got it’s mostly shelter that is pushing inflation higher and that’s a horribly lagging indicator based on how it’s calculated by the bls perhaps instead of talking about core inflation the fed will talk about “super core” where it excludes food energy and shelter” data came in hotter than expected and thats a bit of a disappointment for the overall market its saying that inflation is still not under control the federal reserve will most likely continue with their pace of rate increases there is no pivot in the nearterm future which the market had been hoping for “this is a yet another disappointing sign that inflation continues to stay stubbornly high thus opening the door for the fed to continue its extreme hawkish stance this follows on the heels of the producer level inflation that we saw just yesterday that came in hotter than expected showing the overall inflation backdrop continues to disappoint to the upside” “the hopes for a pivot are on pause there are still two more cpi prints before the december meeting with the fed but for now the pivot is on pause we have to continue to wait to see inflation start to come back down faster which unfortunately the data is not showing right now” “the data is confirming that the overall backdrop of prices is staying higher across the board which is a disappointment and suggests the fed will have plenty of runway to remain hawkish and the market doesnt like that” “october historically is quite volatile leading up to that reputation now we turn our focus to earnings season  how strong is corporate america and the consumer inflation is a clear worry but now the next worry is what does the economy look like and what all corporate america has to say about these continued higher prices and how much its impacting potential consumption thats why this earnings season will be very important to get those clues” compiled by the finance and markets breaking news team