Soft CPI figure sees Stocks, Bonds and Gold soar as the USD and yields collapse

Risk on was definitely back on in Thursdays US session after a softer than expected October Core CPI print, coming in at 0.3% vs the expected 0.5%, combined with broadly less-hawkish comments from Federal Reserve members Daly, Logan and Harker  sparked the biggest rally in US equities since April 2020.

The rally was broad with all major US indexes posting big gains, with the recently underperforming NASDAQ surging a stunning 7.35%

It wasn’t just equities having large moves, the optimism that inflation may have peaked in the US also saw big gains in Gold, Bonds and crypto while the US dollar dropped the most in a decade as markets rushed to price in new terminal rate predictions.

US 10-year treasury yields had the biggest collapse since March 2020, seeing bond prices break November highs (Yields and price are inverted)

The US Dollar Index had its biggest daily drop since Dec 2015, crashing over 2% to 2-month lows. The Dollar Index has now erased all the gains since September’s hotter than expected CPI print.

Golds recent rally continued as a cratering US dollar and lower yields provided a strong tailwind  that saw XAUUSD surge to almost 1760 USd per ounce, it’s highest level since August.

Today’s economic calendar is fairly light, the highlight being UK GDP but US consumer sentiment could also see some volatility with traders continuing to try and position for the Feds next move.