Why Equity Market Spike after Inflation Report Could Be Short-Lived

This inflation report added to the risk appetite that was revived after the tariff flexibility and tepid hourly earnings growth reported in the previous week. Both the payrolls report on Friday and Tuesday’s inflation (TIP) report have increased the odds for a slower pace of rate hikes from the US Fed. In the last five weeks, markets were concerned that faster rate hikes could have an impact on the performance of businesses whose borrowing costs could increase if the Federal rates go up. The inflation report was released before the market opened, and the initial reaction was recorded in the index futures.