In this morning’s data, the headline Consumer Price Index (CPI) increased 0.3% in December, higher than expected and grew 3.4% on an annual basis, which is three tenths higher than last month’s annual figure. Monthly prices for Electricity, up 1.3%, and Shelter, up 0.5%, were relatively strong while monthly prices for Fuel Oil, down -5.5%, were relatively weak. The core rate, which excludes prices for food and energy, increased 0.3% in December as expected, and grew 3.9% on an annual basis, one tenth less than the annualized figure the previous month.
Meanwhile, Initial Jobless Claims were 202,000 for the week ending January 6th, less than expected. Continuing Claims were 1,834,000 for the week ending December 30th, also less than expected.
Overall, a slightly hotter than expected report as headline CPI increased more than expected and the annualized figure ticked higher from the previous month. Shelter was among the contributors to the increase. Core rates came in as expected for the month and the annualized figure remains above the Federal Reserve target, despite ticking slightly lower from the previous month. The labor market remains tight as initial claims are still in the low 200k range and continuing claims have decreased a bit from levels seen in late 2023. While the path of disinflation likely remains in place, the slightly hotter report could give some pause to the Federal Reserve in regard to reducing rates in the months ahead.
In all, the 10-year US treasury yield ticks higher following the report and equity futures are slightly lower as we head into the market open.
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