The United States Consumer Price Index (month-on-month) was 0.9% in March. The result matched expectations.
The data refers to the monthly change in consumer prices. No further figures were provided in the source text.
March Inflation Meets Expectations
The March inflation number came in right where we thought it would at 0.9%. While this was not a surprise to the market, it confirms that high prices are not going away quickly. This all but guarantees the Federal Reserve will continue its aggressive interest rate hikes.
With the Fed funds rate already sitting at 6.00%, the market is now pricing in at least two more hikes before the summer. We are seeing heavy trading in options tied to the SOFR, betting that rates will push towards 6.50% or higher. Shorting Treasury futures remains a primary strategy for traders navigating this environment.
This high-rate environment is bad news for the stock market, increasing borrowing costs and hitting growth-oriented sectors hard. The VIX, which measures market fear, has already surged past 25, a level we haven’t consistently seen since the market turmoil back in 2025. We expect traders will continue buying put options on major indexes like the S&P 500 to protect against further declines.
The U.S. dollar is strengthening significantly as a result, as our interest rates are now much higher than those in Europe or Japan. The dollar index has pushed to its highest level in over a year. We believe long dollar positions against the euro and the yen will remain profitable for the coming weeks.
We can’t ignore the source of this inflation, with WTI crude oil prices surging past $110 a barrel last month due to renewed supply concerns. This energy shock is a primary driver, and call options on oil futures are being used to speculate on even higher prices. This trend, combined with wage growth that is still running near 5%, suggests inflation is becoming deeply embedded.
