Odds of a Federal Reserve rate hike at its next meeting jumped from a coin flip to roughly 90% after two inflation prints confirming persistent price pressures.
August producer inflation on Thursday, Sept. 10, showed the annual rate accelerating to 5.4% from 4.8%.
On Friday, Sept. 11, consumer inflation held at 3.4% annually, but core prices rose 0.3% month-over-month against 0.2% expected, a tenth above the threshold Fed Gov. Christopher Waller named as his trigger for backing a hike.
Energy was why the monthly numbers keep firming.
West Texas Intermediate crude rose above $100, its highest since July, after renewed attacks in the Strait of Hormuz. Oil prices were up more than 70% this year.
Gasoline prices hit $4.29 a gallon on Friday and are up
15 cents on the week, while Michigan drivers paid an average of $4.31 a gallon, up more than 26 cents in seven days.
Diesel was worse. AAA put the national average at a record $6.06 a gallon Friday, the first reading above $6 and 63% higher than a year ago.
Diesel prices hit freight, farming and construction, which is how an energy shock migrates into everything else.
Persistent inflation and soaring energy costs continued to push bond yields higher.
The 30-year Treasury yield reached 5.35%, a level last seen in May 2007, while the 10-year touched 4.94% and the 2-year cleared 4.5%.
Consumers have noticed.
University of Michigan’s preliminary consumer sentiment fell to 47.8 in September. That is the second-lowest reading in the survey's history, which goes back to the 1950s.
Consumers now expect prices to rise 4.6% over the coming year, up from 4% a month ago. Survey director Joanne Hsu noted that with fuel prices climbing and trade tensions back in the conversation, "consumers anticipate greater pressures on their pocketbooks to come."
Best S&P 500 stocks of the week
Skyworks Solutions Inc., a semiconductor company, surged 28.1%, the best performer in the S&P 500, lifted by Apple's foldable iPhone Duo launch and its pending all-stock merger with Qorvo Inc.
Hewlett Packard Enterprise Co. gained 17.7% and Dell Technologies Inc. was up 14.6% as the AI server complex had strong buying demand all week, a view Oracle Corp. validated Friday by reporting $664 billion in remaining performance obligations and 62% cloud revenue growth.
Corning Inc. rose 15% after it announced a multiyear, multibillion-dollar agreement Tuesday to supply Verizon with more than 80 million miles of optical fiber through 2032, covering both broadband expansion and AI backbone capacity.
Benzinga is a financial news and data company headquartered in Detroit.
This article originally appeared on Detroit Free Press: How what you pay at the gas pump could ultimately influence Fed rates
