U.S. inflation accelerates as consumer and producer prices run hot
September inflation readings came in hotter than expected at both the consumer and producer level. The Consumer Price Index (CPI) rose 0.6% on the month and 3.7% from a year earlier, up from 3.4% in August, with gasoline prices jumping 9.1% on the month. Core CPI, which excludes food and energy, also edged higher to 2.6% from 2.4%. A separate report showed the Producer Price Index (PPI) up 1.3% on the month, its largest gain in more than four years, and 6.3% from a year earlier, the strongest reading since 2022.
Why this matters: Following the hotter inflation reports, U.S. Treasury yields moved higher as expectations grew for further interest rate increases from the U.S. Federal Reserve (Fed) to combat rising inflation. Equities also pulled back, particularly in technology and other rate-sensitive areas, including artificial intelligence (AI)-related companies that rely in part on borrowing to fund their capital spending and are more exposed to higher borrowing costs. The Fed’s next policy decision is scheduled for October 28.
Canadian data points to uneven resilience across manufacturing and housing
Canadian data released during the week pointed to an economy that is holding up, though unevenly. Manufacturing sales rebounded 1.5% in August, ahead of expectations, while wholesale sales fell 1.6%, led by lower motor vehicle and parts sales. Housing was similarly split, with housing starts rising to an annualized 248,000 units in September, while home sales fell 2.3% from August, as higher borrowing costs kept buyers on the sidelines.
Why this matters: The data suggests the Canadian economy continues to expand, with softer resale housing activity reflecting the strain of higher borrowing costs. With inflation pressures from elevated energy prices also in focus, attention turns to Canada’s September inflation report, due out this week, and the Bank of Canada’s (BoC) policy decision on October 28, which will offer further insight on the direction of interest rates.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.05 | 0.11 | 1.78 | 2.28 | 194 |
| Canadian Bonds | 0.30 | 1.17 | 0.38 | -0.56 | 1,204 |
| Canadian Equities | 1.44 | 2.74 | 16.10 | 21.50 | 36,177 |
| U.S. Equities | -1.94 | 0.15 | 12.89 | 16.87 | 7,659 |
| International Equities | 1.44 | -0.07 | 10.83 | 14.72 | 3,122 |
| Emerging Market Equities | -5.14 | -4.89 | 17.48 | 20.13 | 1,621 |
| European Equities | 2.07 | 1.72 | 12.17 | 16.29 | 216 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | 0.83 | 0.64 | -2.94 | -0.60 | 0.71 |
| C$/Euro | 0.50 | 1.48 | 1.43 | 3.35 | 0.63 |
| C$/Pound | 0.11 | 0.19 | -1.87 | 0.19 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | 10.41 | 12.15 | 78.16 | 75.51 | 101 |
| Gold ($/oz) | -0.83 | -0.13 | -7.03 | -6.77 | 4,181 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). It is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
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