Weak Inflation Numbers Ease Concerns About A Fed Hike In April

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Includes: CPI, DIA, QQQ, SPY
by: BubbleBustInvesting

Summary

Consumer prices rose at a moderate pace in March.

That eases concerns of a Fed rate hike in April.

Good news for Wall Street, for now.

Consumer inflation rose at a moderate pace in March, according to a Labor Market report published this morning. The Consumer Price Index ((NYSEARCA:CPI)), a gauge of what a typical consumer pays to buy a basket of goods and services, rose by 0.1 percent last month, below the 0.2 markets expected. CPI declined by 0.2 percent in February.

Separately, the government reported that Initial Claims, a gauge that monitors the number of people who file for unemployment compensation, came at 253,000, below the 268,000 markets expected.

Indicator

Actual

Expected

Prior

Consumer Price Index

+0.1%

+0.2%

-0.2%

Core CPI

+0.1

+0.2

+0.3

Initial Claims

253K

268K

267K

Click to enlarge

The weak March CPI comes a day after the government reported a weak March Producer Price Index, and weak March retail sales.

Indicator

Actual

Expected

Prior

Retail Sales

-0.3%

+0.1%

0.0%

Retail Sales ex auto

+0.2

+0.4

0.0

Producer Price Index (PPI)

-0.1

+0.3

-0.2

Core PPI

-0.1

+0.2

0.0

Click to enlarge

The weak CPI numbers, which bring inflation over the last 12-month period to 0.90%, ease fears that the Federal Open Market Operations Committee (FOMC) will raise interest rates in its next April meeting.

That's music in the ears of Wall Street investors and traders, as the current ultra-low environment favors investments in every other asset except cash.

The trouble is that weak inflation numbers and weak retail sales are bad sign for profits, the "milk" of Wall Street. That could, perhaps, explain a mixed market picture in early morning trade.

Major Equity Indexes at 10am

Index

Friday's

Performance (%)

SPDR S&P 500 Trust (NYSEARCA:SPY)

-0.13%

PowerShares QQQ Trust (NASDAQ:QQQ)

-0.14

SPDR Dow Jones Industrial Average (NYSEARCA:DIA)

+0.03

Click to enlarge

Disclosure: I am/we are long QQQ.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.