Thursday 15 October 2026
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US inflation accelerates to 3.7%, sending Wall Street lower and ASX futures down

Consumer prices rise more than expected, lifting bond yields to multi-decade highs and raising odds of a Fed rate hike

By LineZotpaper
Published
Updated
Read Time2 min
Sources5 outlets
Wall Street slumped and Australian sharemarket futures pointed lower after a US inflation report showed consumer prices rose 3.7 per cent in September from a year earlier, accelerating from August's 3.4 per cent rate and exceeding economists' expectations of 3.6 per cent. The S&P 500 fell 1.1 per cent, its fifth loss in six days since setting an all-time high, while the Dow Jones Industrial Average lost 171 points (0.3 per cent) and the Nasdaq composite dropped 1.6 per cent.

The hotter-than-expected inflation data reignited fears that the Federal Reserve may need to raise interest rates again. Markets now see a 39 per cent chance of a rate hike at the Fed's next meeting in two weeks, up from 22 per cent a day earlier, according to CME Group data.

The 10-year US Treasury yield rose to 5.23 per cent from below 5.17 per cent just before the report, briefly spiking above 5.32 per cent and approaching its highest level since 2002. Yields have been climbing for months on signals of a still-growing US economy, rising government debt loads, and recently, fuel price jumps linked to the war with Iran. Brent crude oil added 1 per cent to $US106.71 a barrel.

Australian investors are bracing for a weaker open. ASX futures point to a fall of 33 points, or 0.4 per cent, at Thursday's open, extending Wednesday's 0.6 per cent loss. The Australian dollar slipped to US69.66¢.

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Analysis

Why This Matters

  • US inflation is the key input for Fed policy; a re-acceleration increases the risk of further rate hikes, which would tighten financial conditions globally.
  • Higher bond yields raise borrowing costs for households, businesses and governments worldwide, and have already pulled stock markets from recent records.
  • Australian investors face a direct hit from lower share prices and a weaker Australian dollar, as the RBA watches US data closely.

Background

Inflation has remained stubbornly above central bank targets since economies rebounded from the COVID-19 pandemic. US consumer price inflation had been gradually cooling from last year's peaks, but September's reading broke that trend. Recent jumps in fuel prices due to geopolitical tensions, particularly the war with Iran, have added upward pressure. The Fed has held its benchmark rate steady at recent meetings after an aggressive tightening cycle, but this data could prompt a resumption of rate rises.

Key Perspectives

Bond market investors: Yields are at their highest in decades, reflecting expectations that interest rates will stay higher for longer. The brief spike above 5.32% on the 10-year Treasury signals deep concern about persistent inflation. Stock market participants: Equities are falling as higher discount rates reduce the present value of future earnings. The S&P 500 has now lost ground for five of the six sessions since its all-time high. The Federal Reserve: The central bank faces a dilemma: raise rates further to combat inflation, risking a sharper economic slowdown, or hold steady and risk inflation becoming entrenched.

What to Watch

  • The Fed's next policy decision in two weeks, and any shift in officials' communication ahead of it.
  • Oil prices, particularly Brent crude, which directly feed into headline inflation.
  • Whether the 10-year Treasury yield breaks decisively above the 5.25%-5.33% zone and tests levels not seen since the early 2000s.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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