Inflation remained firm in October, underscoring the ongoing risks Federal Reserve officials face in trying to bring price pressures fully under control.
The core CPI—which excludes food and energy—increased 0.3% for a third month. Over the last three months it rose at a 3.6% annualized rate, marking the fastest pace since April according to the government. Year over year the core CPI rose by 3.3%, the same as the prior month.
The headline measure rose 0.2% for a fourth month and a 2.6% from a year before, marking the first acceleration on annual basis since March. Shelter accounted for over half of the overall monthly advance.
Perhaps an accurate conclusion to make is that progress has perhaps stalled.
The data did meet expectations and swap traders boosted odds to about 80% that the Fed will cut rates again on December 18, up from around 56% immediately before the data was released.
The yield curve steepened considerably as shorter dated Treasuries rallied significantly and longer dated sold off by a similar amount, the ultimate steepening move.
Equites were relatively quiet.
Today the PPI is released. What will it suggest? Analysts are expecting prices to rise from last month’s readings, offering further evidence that the fight against inflation has stalled.
The overall PPI is expected to rise by 0.2% versus being flat in the prior period. Core or ex food and energy is forecasted to increase by 0.3% versus 0.2% last month. Year over year the overall PPI is slated to increase by 2.3% versus the prior reading of 1.8%. Core is expected to increase by 3.0% versus 2.8%.
Last night the foreign markets were mixed. London was up 0.54%, Paris up 1.07% and Frankfurt up 1.31%. China was down 1.73%, Japan down 0.48% and Hang Seng down 1.96%.
Futures are flat ahead of the data and speech from FRB Chair Powell. The 10-year is up 3/32 to yield 4.44%.
