Rising gas prices are driving what is perceived as a ‘surge’ in inflationary data. Which isn’t all that surprising seeing as how crude oil has about doubled from its low.
Instead, the reaction to this data shows that there’s a lot of nervous market participants who apparently are convinced that this data set will increase the odds of an interest rate hike. And they’re taking their profits (or at least scaling out of positions).
Whether or not there is a hike depends largely on a seemingly reluctant, if not apprehensive Federal Reserve, whose promises to raise rates in 2016 have yet to be fulfilled.
But the data set we got today isn’t telling us anything new or interesting. It’s just a realization of higher energy prices working their way through consumables like gasoline.