The stocks fall, bond yields rise, the dollar rises after stronger CPI

The US CPI came in stronger than expected at 1.3% with YoY at 9.1% a 4 decade high. Ex food and energy rose 0.7% also higher than expected. Hot. Hot. Hot.

Before the number:

• Dow futures +135
• S&P +19
• Nasdaq +72
• 2 year yield 3.049%
• 5 year 2.99%
• 10 year 2.948%
• 30 year 3.147%
• Gold $1728.30
• Crude oil $96.40

After the number:

• Dow -218 points
• S&P -42.5 points
• Nasdaq -183 points
• 2 year yield 3.16%
• 5 year yield 3.106%
• 10 year yield 3.03%
• 30 year yield 3.187%
• gold is trading at $1720.90
• crude oil is trading at $95.24

The market is implying a 78% chance of a 75 basis point hike in September now as a result of the stronger report. A 75 basis point hike at the July meeting if it was not already in the market, is now.

In the forex market, the dollar has moved higher:

• EURUSD: The EURUSD has move back down to test its lows for the day near the parity level. The current prices trading at 1.0006.. Yesterday the low price reached just below the 1.00 level at 0.99997. Option traders defended the level on the first test. Will they be able to do it again today? Be aware that if the price starts to get away from the 1.0000 to the downside, the option traders may need to sell to hedge their exposure as well. The high for the day was near 1.0085
• GBPUSD; The GBPUSD traded as high as 1.1942 right before the number, but has moved down to a new session low of 1.1847 as I type. The low price from yesterday's trade extended down to 1.18066. The move to the downside did extend below the low from last week at 1.18753. That is now a risk level for traders today. Stay below is more bearish
• USDJPY: The USDJPY trade at 137.05 right before the number, and is moved up to a new high of 137.71. The high price from Mondays trade reach 137.747. The current prices just below that level. A break above would be trading at yet another new high going back to 1998.
• USDCAD: The USDCAD moved up from 1.2978 up to a new high at 1.3056. The price is currently trading at a swing high area between 1.3051 and 1.30548. The current prices trading at 1.3054. A move above 1.30548 with momentum would have traders targeting the high prices from last week between 1.3075 to 1.35826
• AUDUSD. The AUDUSD moved from around 0.6800 to a low of 0.6727 so far. The price is currently trading at the lows. The price is back below the early July lows which formed a base between 0.6761 to 0.67635. That is now the close risk level for shorts. Stay below is more bearish.

/inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term