US Inflation Accelerates to 3.7%, Pressuring Tech Stocks and Brazil's Currency
US consumer prices increased 3.7% year-over-year in September, surpassing forecasts, while core inflation reached 2.6%. The Nasdaq lost 1.88% and the S&P 500 fell 1.11% as the dollar strengthened and gold slipped. Elevated US Treasury yields continue to weigh on Brazil's real and constrain the central bank's ability to lower the Selic rate.
September's US inflation reading climbed to 3.7% from 3.4% in August, while core prices advanced 2.6% annually. Equity markets reflected rate anxiety: the Nasdaq dropped 1.88%, the S&P 500 lost 1.11%, and the Dow edged down 0.09%. The dollar index firmed 0.37% to 102.55, gold declined 1.04% to US$4,112 an ounce, and the 10-year Treasury yield ended at 5.186%, slightly below the prior 5.222%.
In Brazil, the Ibovespa slipped 0.18% and USD/BRL was nearly flat at 5.0278. Business confidence improved to 46.2, beating expectations, but high US yields still limit room for Selic cuts. Prediction markets saw a 74.5% chance of no Fed move in October and 78.5% odds of a December hike.
Higher US inflation and firm Treasury yields could keep Brazil’s real under pressure, making imported goods and travel more expensive for households. Businesses may face costlier credit if the Selic rate stays elevated, potentially slowing hiring and investment. Tech-heavy investors and US equity holders may see further volatility, while savers in dollar-linked assets could benefit. The effects may be uneven, with lower-income consumers feeling price pressures most acutely.