Bracing for More Inflation Volatility

Rising prices at the pump and beyond have become a major point of concern across the United States. The fast-growing U.S. economy has been a global outlier, but rising fuel prices and borrowing costs have consumers and business owners feeling increasingly gloomy. So far, the bull market rally is holding up, yet investors are bracing for new economic data — beginning with the Personal Consumption Expenditures price index, set to be released at 8:30 a.m. Eastern — that could heap more pressure on the Fed to raise interest rates.

The latest: The yield on the 10-year Treasury note was trading around 5.23 percent on Wednesday. The yield on the 30-year Treasury bond on Tuesday hit its highest level since June 2002. S&P 500 futures are under pressure. The benchmark index is on pace for a monthly loss. Brent crude, the international benchmark for oil, rose above $103 on Wednesday. The average price of diesel in the U.S. is at $6.41. Economists surveyed by Dow Jones forecast that core inflation last month rose by 3.3 percent on an annualized basis — in line with the July number.

High inflation is weighing on sentiment. U.S. consumer confidence fell to its lowest level since 2014, the Conference Board reported on Tuesday. Respondents said they saw interest rates and inflation climbing over the next year. Business owners are feeling the pinch, too. The U.S. Chamber of Commerce and Justworks, a payroll processing firm, on Wednesday published their latest small-business survey. Only 27 percent of respondents described the national economy as being in “good health,” a sharp drop from a year ago; 54 percent said inflation was their biggest challenge.