NEW YORK, Sept. 13 (Reuters) - Monthly U.S. consumer prices rose unexpectedly in August as the drop in petrol prices was offset by gains in rents and food costs.
The consumer price index rose 0.1% last month after remaining unchanged in July, the Labor Department said on Tuesday. Economists polled by Reuters had forecast a 0.1% drop in CPI.
In the 12 months since August, CPI grew by 8.3 per cent, lower than July's 8.5 per cent growth. The annual CPI peaked at 9.1% in June, the biggest gain since November 1981.
Stocks: S&P 500 futures fall sharply, down 2.2% Bonds: Yields on 10-year Treasury notes rose 8.3 basis points to 3.445%; Two years of U.S. Treasury Yield
The good news is that the "peak narrative" is on hold because July was the highest print. The bad news is that Upside Miss Cements has seen a third 75 bps hike next week.
With last week and yesterday's rally, the market risk reward that came into this report was anyway slightly lower, regardless of whether we found a report that was online or a little.
We know that the components of shelter, rent, and services are generally more sticky and remain elevated for a long time but what we are seeing in the underlying fundamentals continues to soften.
Unless we get the inflation print, not just one, but two, three, maybe four, steadily moving downwards, only then can we call a trend and the Fed.