CPI strengthens expectations for tightening, long-term bond sales are dismal, US bonds and stocks plummet, and US oil is close to erasing gains since the escalation of the Israel-Palestine conflict.

Following the PPI, the US September CPI also exceeded expectations, continuing the trend of accelerated growth from the previous month. The MoM growth rate of core CPI in September remained the same as August due to high housing costs. Another core inflation indicator, the service CPI excluding housing, saw an accelerated MoM growth rate of 0.61%, reaching the highest growth rate in a year, highlighting sticky inflation.

The unexpected rise in CPI inflation strengthens the market's expectation that the Federal Reserve will maintain high interest rates for a longer period of time and raise rates once more this year. Pricing of swap contracts indicates that investors expect a 50% probability of another rate hike by the Federal Reserve this year, a significant increase from the previous estimate of around 30% on Wednesday. The expected timing for the first rate cut next year has been pushed back from June to July.

After the release of the CPI data, US Treasury bond prices fell and yields rose. The benchmark 10-year US Treasury yield, known as the "anchor for global asset pricing," rose more than 10 basis points from its intraday low. The yield on the 2-year US Treasury bond, which is sensitive to interest rates, quickly rose above 5.0%, rebounding more than 10 basis points from its one-month low set on Wednesday. US stocks came under pressure, with major indices initially falling across the board, but later rebounded as chip and technology stocks rose, supporting the S&P and Nasdaq.

After the US Treasury Department announced the dismal results of the sale of 30-year Treasury bonds, US bond yields accelerated their upward trend. The 10-year US Treasury yield rose more than 20 basis points from its daily low. The rise in US bond yields once again dampened risk appetite, causing US stocks to decline. The S&P and Nasdaq, which had previously rebounded, turned lower again, and the Dow also hit a new daily low.

After the release of the CPI data, the US dollar index, which had hit a two-week low for two consecutive days, quickly rebounded, causing various non-US currencies to decline. The Japanese yen approached the key level of 150.00 against the US dollar, which analysts had previously believed could trigger intervention by the Japanese government. It approached the 11-month low set last week, and the offshore renminbi briefly fell below 7.31, dropping more than 200 points from its intraday high.

The minutes of the meeting showed that there were differences among European Central Bank policymakers regarding interest rate hikes, but it was implied that the tightening cycle would come to an end. European bond yields continued to rise in line with US bonds. Interest rate-sensitive sectors such as real estate in European stocks declined, but the pan-European index was supported by energy and healthcare stocks, maintaining its upward trend. After announcing progress in the development of a drug for kidney disease, Danish pharmaceutical company Novo Nordisk saw consecutive large gains and reached a historical high along with the domestic stock index.

In the commodity market, gold, which had been rising steadily this week, turned lower under pressure from the rising US dollar and bond yields. The rebound of the US dollar also weighed on other commodities. International crude oil initially fell across the board, with Brent crude erasing more than 2% of its gains before closing higher. US WTI crude oil failed to rebound and fell for the third consecutive day, almost wiping out all the gains made after the sharp rebound on Monday following the escalation of tensions between the US and Iran. The US Department of Energy announced on Thursday that US EIA crude oil inventories increased by over 10 million barrels last week, with US crude oil production reaching a record high of 13.2 million barrels, becoming a contributing factor to the decline in oil prices.

European natural gas, which rebounded strongly by over 10%, emerged as the big winner in the commodity market. Negotiations between Chevron and Australian liquefied natural gas (LNG) factory workers' union continued on Thursday, but a labor agreement was not reached. The second round of negotiations has been extended to Friday. If the negotiations fail, workers may resume strikes on October 19, as warned by the union on Monday.

The three major US stock indices stopped their four-day consecutive gains. At the close on Wednesday, the Nasdaq fell 0.63% to 13,574.22 points, after hitting a high since September 19 for three consecutive days. The S&P 500 fell 0.62% to 4,349.6 points, after hitting a high since September 20 for two consecutive days. The Dow Jones fell 173.73 points, or 0.51%, to 33,631.14 points, after hitting a high since September 25 for two consecutive days.

Small-cap stocks, mainly value stocks, represented by the Russell 2000, fell 2.2%, hitting a one-week low for two consecutive days and underperforming the broader market for two consecutive days. The tech-heavy Nasdaq 100 index fell 0.37%, falling from its high since September 14 after four consecutive days of gains, but still outperforming the broader market.

In the Dow Jones constituents, Boeing led the decline with a drop of over 2% at the close. Coca-Cola, Home Depot, Verizon, 3M, Honeywell, Caterpillar, McDonald's, and IBM all fell by over 1%. Walgreens, a chain pharmacy that announced lower-than-expected fourth-quarter earnings but made progress in cost-cutting, rose by about 7%, performing the best among the constituents.

Among the major sectors of the S&P 500, only the IT sector, which includes chip stocks, and the energy sector rose, with gains of 0.1% and nearly 0.1% respectively. The materials sector fell by over 1.5% and the utilities sector fell by nearly 1.5%, leading the decline. The real estate, communication services, and consumer staples sectors all fell by over 1%, while the financial sector, with the smallest decline, fell by over 0.6%. In the S&P sectors, only the IT and energy sectors saw gains on Thursday.

Several leading technology stocks experienced intraday declines, with Tesla falling nearly 1.6%, marking a two-day decline to its lowest level since October 3. Among the FAANMG six major technology stocks, Apple rose 0.5%, continuing its two-day rally and reaching a new high since September 6. Amazon rose nearly 0.4%, extending its five-day rally and reaching a new high in two days since September 20. On the other hand, Netflix fell 1.3%, marking a three-day decline and reaching a low since May 25. Alphabet, the parent company of Google, which rebounded to its highest level since March last year on Wednesday, fell 1.1%. Meta, the parent company of Facebook, which had a four-day rally to its highest level since January last year on Wednesday, fell 1.1%. Microsoft, which rebounded to its highest level since September 14 on Wednesday, fell nearly 0.4%.

Overall, chip stocks continued to rise for three consecutive days, outperforming the broader market, but gave back most of their gains during the midday session. The Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX rose more than 1% in early trading and closed up about 0.3%, reaching a new high in three days since September 14. At the close, Broadcom rose more than 3%, Applied Materials rose nearly 2%, TSMC's US stocks rose nearly 0.5%, AMD rose more than 0.4%, Nvidia and Qualcomm rose 0.3%, while Arm fell more than 5%, Texas Instruments fell more than 1%, and Intel fell 0.1%.

Most AI concept stocks followed the broader market in decline. At the close, C3.ai (AI) fell more than 5%, SoundHound.ai (SOUN) and BigBear.ai (BBAI) fell more than 2%, while Adobe (ADBE) rose more than 1% and Palantir (PLTR) rose 0.1%.

Popular Chinese concept stocks, which had rebounded for two consecutive days, fell behind the broader market. The Nasdaq Golden Dragon China Index (HXC) fell 3.4%. Among individual stocks, as of the close, JD.com fell more than 8%, leading the decline among the Nasdaq 100 constituents, Dada also fell more than 8%, Tianjin Bio and Wanguo Data fell more than 7%, NIO fell nearly 6%, Baidu, Bilibili, Xiaopeng Motors, and Tiger Brokers fell more than 4%, Alibaba fell more than 3%, Pinduoduo and Li Auto fell more than 2%, Tencent Music and NetEase fell more than 1%.

Banking sector indices fell across the board. The overall banking industry indicator, the KBW Bank Index (BKX), fell 1%, continuing to retreat from its high since September 29, which was set during a five-day rally. The KBW Nasdaq Regional Banking Index (KRX), which had a two-day rally to a high since September 20 on Wednesday, fell 1.3%. The SPDR S&P Regional Banking ETF (KRE), which tracks regional bank stocks and had a two-day rally to a high since September 29 on Wednesday, fell 1.2%. In major banks, as of the close, Morgan Stanley fell more than 1%, Goldman Sachs fell 1%, Bank of America fell 0.4%, JPMorgan Chase, which will release its third-quarter earnings report on Friday, fell more than 0.2%, Citigroup remained flat, and Wells Fargo rose more than 0.1%.

Among the stocks with large fluctuations, German sandal brand BIRKENSTOCK, which fell 12.6% on its first day of listing, fell 6.6%; after the union announced the approval of a "historic" contract, including a doubling of hourly wages to $6, meat company Hormel Foods (HRL) fell 9.8%; medical equipment company ResMed (RMD) fell 5.5% after RBC downgraded its rating from Buy to Hold due to expectations of slowing profit growth; and industrial and building materials supplier Fastenal (FAST), which reported better-than-expected third-quarter earnings, rose 7.5%.

In Europe, the pan-European stock index rebounded for three consecutive days, but the increase is still far from Tuesday's level. The European Stoxx 600 index, which rose nearly 2% on Tuesday, rose 0.1%, reaching a new closing high since September 21. The major European national stock indexes continued to perform differently, with the German and Spanish stock indexes falling after two consecutive days of gains, and the French stock index, which includes luxury goods stocks such as LVMH, falling for two consecutive days, while the UK stock index, supported by energy stocks, rebounded and performed the best, and the Italian stock index rose for three consecutive days.

In various sectors, the oil and gas sector rose 1.3% and led the gains, while the healthcare sector, which includes Novo Nordisk, rose about 0.9% and continued to lead the gains. The interest rate-sensitive utilities and real estate sectors fell 0.7% and nearly 1% respectively. Among individual stocks, Novo Nordisk rose 4.2% after preliminary signs showed that its drug Ozempic is effective in treating diabetic patients with kidney failure, rising more than 4% for two consecutive days and reaching a historical high, driving the Danish stock index OMX Copenhagen 20 to also hit a record high, rising 2.3%; LVMH, which fell 6.5% on Wednesday, fell 1.6% after announcing that third-quarter sales growth exceeded expectations but slowed down for two consecutive days.

10-year US Treasury yield hits a two-week low, then rises more than 20 basis points

European government bond prices fell across the board, and yields followed the rise in US Treasury yields, while UK bond yields rebounded after two consecutive days of decline. At the end of the bond market, the yield on the UK 10-year benchmark government bond closed at 4.42%, up 10 basis points on the day; the yield on the 10-year benchmark German government bond closed at 2.78%, up 7 basis points on the day.

On Tuesday and Wednesday, the yield on the US 10-year benchmark government bond had dropped by more than 10 basis points, and on Tuesday it even recorded the largest single-day decline since March this year. Before the release of the US CPI on Thursday, the yield on the 10-year benchmark government bond had fallen below 4.52% for two consecutive days, hitting a low since September 29. After the CPI was released, it quickly rose back above 4.60% and continued to rise. At one point during the midday trading session, the yield on the US 10-year benchmark government bond approached 4.77%, hitting a daily high and rebounding by about 21 basis points from the intraday low. At the end of the bond market, it was around 4.70%, up about 14 basis points on the day, putting an end to the two-day decline. The yield rates of US Treasury bonds at various maturities rebounded significantly on Thursday, with the increase in CPI and the announcement of US Treasury bond sales leading to two rounds of expansion. The yield rate of long-term bonds increased the most.

The 2-year US Treasury bond yield, which is more sensitive to interest rate prospects, fell below 4.97% before the release of US CPI, hitting a daily low. After the release of CPI, it quickly rose above 5.0%. The US stock market rose above 5.08% in early trading, hitting a daily high. It rebounded more than 13 basis points from the low point since September 8, which was continuously refreshed for two consecutive days. By the end of the bond market, it was about 5.07%, rising nearly 9 basis points during the day, and rising for the second consecutive day after a slight rebound on Wednesday.

The 2-year US Treasury bond yield returned to the closing level of last Friday.

After the announcement of the results of the sale of 30-year US Treasury bond yields in the midday session of the US stock market, the secondary market 30-year US Treasury bond yield approached 4.89%, rising more than 20 basis points from the low point since September 29 before the European stock market opened. By the end of the bond market, it was about 4.85%.

The price of 30-year US Treasury bonds rebounded significantly on Thursday.

After the release of CPI, the US dollar index, which hit a new low for more than two weeks, turned higher. The offshore renminbi fell below 7.31 during the intraday session.

The ICE US Dollar Index (DXY), which tracks the exchange rates of the US dollar against six major currencies such as the euro, maintained a downward trend in the Asian market and the early European stock market. Before the European stock market opened, it fell below 105.60, hitting a new intraday low since September 25 for two consecutive days, and fell nearly 0.3% during the day. Before the release of US CPI, it was below 105.70. After the release of CPI, it quickly turned higher and rose above 106.00 during the midday session of the US stock market, rising more than 0.7% during the day.

By the end of the US stock market on Thursday, the US dollar index was slightly below 106.60, up 0.7% during the day. The Bloomberg Dollar Spot Index, which tracks the exchange rates of the US dollar against ten other currencies, rose nearly 0.7%, reaching a high since October 4 in the same period, and both the US dollar index and the Bloomberg Dollar Spot Index stopped the five-day decline.

Among non-US currencies, the yen fell for three consecutive days due to a intraday decline. After the release of US CPI, the US dollar against the yen quickly turned higher, and the US stock market rose above 149.80 in midday trading, hitting a daily high of 149.83, approaching the 11-month high set on Tuesday above 150.10. The euro against the US dollar tested 1.0640 before the European stock market opened, hitting a high not seen since September 25 for three consecutive days. After the release of US CPI data, it quickly fell, with the US stock market falling below 1.0530 and hitting a daily low at midday, dropping more than 0.8% during the day. The British pound against the US dollar rose above 1.2330 before the European stock market opened, approaching the high since September 21 that was set on Wednesday. However, it also fell after the release of US CPI data, with the US stock market approaching 1.2170 and hitting a daily low at midday, falling more than 1% during the day.

Offshore renminbi (CNH) against the US dollar rose above 7.29 before the European stock market opened, hitting a daily high of 7.2896, rising 114 points during the day. However, it continued to decline after the release of US CPI data, with the US stock market erasing its gains and falling before the market opened. The US stock market fell below 7.31 in early trading and hit a daily low of 7.3130 at midday, falling 234 points from its intraday high and far from the intraday high of 7.2698 on Tuesday when it rose above 7.27, which was the highest level since September 15.

Bitcoin (BTC) approached the $27,000 mark during the Asian market session, hitting a daily high, but fell back during pre-market trading in the US stock market. The US stock market fell below $26,600 at midday, approaching the low since September 28 that was set on Wednesday, falling nearly $400 and dropping more than 1%. By the close of the US stock market, it rebounded above $26,700, with a slight increase in the past 24 hours, almost unchanged from the level a day ago.

US crude oil futures fell for the third consecutive day, approaching a four-week low. When the US stock market hit a daily high before the market opened, US WTI crude oil rose to $85.2, with an increase of slightly over 2% during the day. Brent crude oil rose to $87.64, with an increase of more than 2.1% during the day. The US stock market continued to fall in early trading and turned downward at midday, while Brent crude oil slightly rose before the close.

In the end, WTI November crude oil futures fell 0.69% to $82.91 per barrel, falling for three consecutive days and approaching the closing low since August 30 that was set last Thursday. Brent December crude oil futures rose 0.21% to $86.00 per barrel, with a slight increase and not approaching the low since August 23 that was set last Thursday.

European natural gas erased the more than 6% decline on Wednesday and rose more than 10% for the third day this week. In the first two days of this week, gas prices surged due to the turmoil in the Middle East and concerns about supply disruption caused by the damage to the gas pipeline in Finland. UK natural gas futures rose 14.87% to 133.96 pence per therm, hitting a closing high since August 22. Dutch natural gas futures rose 15.05% to 53.002 euros per MWh, hitting a closing high since February 15.

London lead fell for the fourth consecutive day to a three-month low, while gold ended its four-day rally and fell from a two-week high.

Most London base metal futures fell on Thursday. Lead led the decline, falling nearly 2% and hitting a new three-month low on Wednesday, extending its four-day losing streak. Copper, aluminum, and zinc all gave back the small gains from Wednesday's rebound. Copper closed below the $8,000 mark for the first time in a week, aluminum fell to its lowest level since mid-September, and zinc hit a one-month low after hitting a new low on Tuesday. Tin also fell after a rebound on Wednesday, failing to approach the high of more than a week set by a five-day consecutive rise on Monday. Nickel, which had fallen for two consecutive days, rebounded and bid farewell to the low point since October 2021 set on Wednesday.

New York gold futures hit a daily high of $1,898.3 before the US stock market opened, rising nearly 0.6% during the day. After the release of US CPI data, it continued to fall, and US stocks fell in early trading, closing lower for the first time in the past five trading days.

COMEX December gold futures fell 0.23% to $1,883.00 per ounce, falling from the high set on Wednesday, September 27. Despite a 1.03% increase on Monday, marking the largest gain in over two months, the upward momentum of gold this week remains unchanged.

New York silver futures also ended their four-day rally, with COMEX December silver futures falling 0.78% to $21.959 per ounce, falling from the closing high set on Wednesday, September 29, after three consecutive days of gains.

Gold futures fell during Thursday's trading session.