The USD is higher to start the North American session and ahead of the September US CPI data which is scheduled to be released at 8:30 AM ET. The expectation for the CPI is for 0.4% rise for the headline and 0.3% for the core measure. Those increases are the same as in August and are indicative of higher inflation from tariffs creeping in to the data. The YoY data is expected to rise by 3.1% for both measures. That compares with 2.9% (headline) and 3.1% (core) last month.
Perhaps in reaction to an anticipated uptick in inflation, Pres. Trump yesterday raised significantly its tariff-rate quota for Argentine beef, quadrupling the amount that can be imported annually with a lower tariff rate to an estimated 80,000 metric tons (from 20,000 metric tons). The price of beef has shot through the roof recently (have you been to a steakhouse- see local menu below) and tariffs are contributing. U.S. ranchers and cattle industry groups are strongly opposing the plan, citing concerns that it will undermine the domestic cattle market. You can't always have your cake and eat it too. Some industries can eat the cost of the tariffs, but others can not. The price of food hurts the lower income people the most. Expect to see tariff revenue going back to the farmers in the form of subsidies. Will foreign suppliers do the same for their cattle farmers?
In the video, above I will outline the key technical levels in play through the US CPI data.
Geopolitical risks remain high. With relations with China deteriorating with hope that the meeting next week between Pres. Trump and China's Xi will solve all problems, the focus will the US president has returned to Canada where he said that ALL trade negotiations are hereby terminated as a result of a fraudulent advertisement that said Ronald Reagan "did not like tariffs when he actually loved tariffs for our country".
Trump is also posted this morning that "The United States is wealthy, powerful, and Ashley secure again all because of tariffs". He is on the rampage ahead of the CPI. What will we get at 8:30 AM ET.
Ahead of the report, US stock indices are higher helped by chip stocks which are higher after Intel reported better than expected earning after the close.
- Dow industrial average up 92 points
- S&P up 24.81 points.
- Nasdaq up 128 points
Intel shares are up 7%, Nvidia is up 0.60%, Broadcom is up 1.69%, AMD is up 2.30% and Micron is up 2.37% in pre-market trading. In the US debt market, yields are higher:
- 2-year yield 3.501%, +1.9 basis points.
- 5 year yield 3.617%, +2.1 basis points
- 10 year yield 4.008%, +1.9 basis points
- 30 year yield 4.586%, +1.5 basis points.
Looking at other markets:
- Crude oil is trading up $0.43 at $62.24.
- Gold is down $63 or -1.53% at $4062.89. Support at $4000.
- Silver is down $0.78 or -1.62% at $48.06
- Bitcoin is up $1170 at $111,286
