NYSE senior market strategist on ‘bad’ inflation data and what it means for

New York Stock Exchange Senior Market Strategist Michael Reinking argued on Wednesday that markets were “well-prepared” for the headline inflation number released earlier, but stressed the data was “bad.”

Speaking with Fox News Digital, Reinking also noted what the latest inflation data, which sits at a fresh 40-year high, means for the next moves of the Federal Reserve as central bank officials try to tame soaring inflation.

On Wednesday morning, the Labor Department said that the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 9.1% in June from a year ago. Prices jumped 1.3% in the one-month period from May. Both figures were far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists. 

The New York Stock Exchange on Wednesday, July 13, the day the June inflation data was released by the Labor Department.  (FOX Business/Talia Kaplan )

The data marks the fastest pace of inflation since December 1981. 

INFLATION SURGES 9.1% IN JUNE, ACCELERATING MORE THAN EXPECTED TO NEW 40-YEAR HIGH

“I think markets were pretty well-prepared for the headline number to be hotter than expected,” Reinking told Fox News Digital, pointing to the price of gas in the middle of June, which he said was at its peak at the time. 

“We have seen gasoline prices come in over the last month,” he noted. 

Last month, gas prices hit records with the national average above $5 a gallon. 

On Wednesday, the national average for a gallon of gas was $4.63, about 40 cents lower compared to the month before when it was more than $5 dollars, according to AAA. 

Reinking argued that the so-called core prices data, which exclude more volatile measurements of food and energy, presented a bit of a surprise. 

The Labor Department said that core prices climbed 5.9% from the previous year. Core prices also rose 0.7% on a monthly basis – higher than in April and May – suggesting that underlying inflationary pressures remain strong and widespread.

“The core CPI was really where the issue was because we didn’t see any sort of deceleration within that data,” Reinking said. “When you look at all of the different components, we were hoping to see some easing in used car pricing, the automobiles, potentially apparel given what we’ve heard from retail companies and we didn’t see any of that.” 

The worse-than-expected report is expected to have major implications for the Federal Reserve and will likely solidify a series of aggressive rate hikes in an effort to curb prices. Policymakers already raised the benchmark interest rate by 75-basis points last month for the first time since 1994 and have confirmed that a similarly sized increase is on the table in July.

Reinking argued that with inflation running even hotter than economists expected in June, Wall Street is now ramping up the odds of a mega-sized, 100-basis point hike in July. 

The market strategist noted that the Fed had indicated that it wants to see inflation data…