- Stocks have lost gains on speculation that the rally that followed weaker inflation data went too far, with the Federal Reserve still on track to maintain tight monetary policy. Bond yields have risen.
- The S&P 500 edged lower after a 1% gain earlier in the day, putting the index near the 50% fibonacci retracement level for the current bear market. The recent surge has been attributed by several analysts to short-covering. Following a runup that sent the Nasdaq 100 more than 20% above its June lows, technology underperformed. Tesla (TSLA) and Amazon (AMZN) both sank.
- Treasuries fell, sending 30-year yields up nearly 16 basis points after an auction of the securities drew only average demand despite having been cheapened prior to the bidding deadline.
- A critical metric for US Producer prices fell unexpectedly for the first time in more than two years, owing primarily to lower energy costs. Both the overall and core figures were lower than expected, as was the consumer prices report on Wednesday.
- Nonetheless, inflation remains stubbornly high, likely keeping the Fed on an aggressive path to reduce it. Swaps continued to price in a US central bank rate hike of 50 basis points in September.
