EU markets and bonds slumped on Thursday, after statistics revealed that U.S. inflation increased marginally more quickly than anticipated in September. This has dispelled any hopes that the Federal Reserve would moderate the pace of its anticipated rate increases.
In the year ending in September, consumer prices increased at an annualized pace of 8.2%, exceeding estimates for an 8.1% increase after 8.3% gains in August.
Contrary to estimates for an increase of 6.5% and in comparison to 6.3% rate in August, the core rate of inflation, including the cost of food and energy, increased by 6.6% last month.
After the report, the pan-European STOXX 600 index fell, closing at a loss of 0.8% after posting a daily gain of 0.8% before to the data.
The DAX in Germany traded 0.2% higher at 03:40 ET (07:40 GMT), but the CAC 40 in France dipped 0.2% and the FTSE 100 in the United Kingdom fell 0.5%.
The benchmark 10-year bond yields for the rest of the euro zone—Germany—came under pressure. They were recently unchanged at 2.304%, down from 2.229% immediately prior to the data.
Prior to the release of the inflation statistics, the euro had gained daily value of 0.47% but was last down 0.7% at $0.9636.
Data from Germany released earlier on Thursday revealed that consumer inflation in the largest economy in the Eurozone increased by 10.0% annually in September. This was 1.9% higher from the previous month, putting more pressure on the European Central Bank to keep tightening monetary policy.
Investors elsewhere are still concerned that the Bank of England would stop its emergency bond-buying program at the end of the week, which might lead to more vigorous selling in the U.K. gilt market and further depreciate the pound.
The U.S. central bank may use the inflation statistics that will be released later in the session to determine the size of its next rate change in November. Markets anticipate another 0.75 percentage point hike.
