In this morning’s data, the Consumer Price Index (CPI) was flat in October, slightly less than expected. It grew 3.2% on an annual basis, less than the annual level the previous month. Monthly prices for Utility (Piped) Gas Service, up 1.2%, and Transportation Services, up 0.8%, were relatively strong, while monthly prices for Gasoline, down -5.0%, were relatively weak. Prices for Shelter were up 0.3% in October which was less than the 0.6% increase the previous month. The core rate, which excludes prices for food and energy, increased 0.2% in October, also less than expected and grew 4.0% on an annual basis.
Overall, headline CPI inflation moderated in October as gasoline prices were relatively weak. The monthly core CPI was higher than the headline number but less than expected, and the annual figure is still double the Federal Reserve’s 2% target. Also, lower shelter prices hint at the disinflation evident in the report. Even as economic data show some slowing, the Fed may decide to keep rates higher for even longer to ensure core inflation measures move closer to their target. This process should adversely impact consumer spending, as more and more consumers feel the effects of higher rates and higher prices. How well company earnings hold up amidst this process will be key for the markets in the coming weeks.
In all, the 10-year US treasury yield ticks lower following the report and equity futures are higher as we head into the market open.
This material is intended to be for informational purposes only and is intended for current or prospective clients of Argent Trust Company. This information is obtained from sources believed to be reliable, and its accuracy and completeness are not guaranteed. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice, and does not take into account all the circumstances of each investor. Forward-looking assumptions are Argent Trust Company’s current estimates or expectations of future events or future results based on proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information. Investments can go down as well as up. Past performance is not a reliable indicator of future results.
