Announced this morning, the Consumer Price Index (CPI) increased 0.4% in September, slightly higher than expected. It grew 3.7% on an annual basis, about the same as the annual level the previous month. Monthly prices for Fuel Oil, up 8.5%, were relatively strong, while monthly prices for Used Cars and Trucks, down -2.5%, were relatively weak. The core rate, which excludes prices for food and energy, increased 0.3% in September, as expected and the same as the previous month. It increased 4.1% on an annual basis, as expected, and was lower than the annual level the previous month. Meanwhile, initial claims were 209,000 for the week ending October 7th, slightly less than expected.
Overall, CPI inflation figures grew in the previous month for both the headline and core measures. Annual rates for the core level remain well above the 2% target stated by the Federal Reserve. In addition, the labor market remains resilient with initial claims remaining in the low 200,000 level as they have for many weeks. Given these data and recent geo-political events, the Federal Reserve may leave rates where they are for the time being. In this environment, how company earnings and their outlooks hold up in upcoming reports will be closely watched in the coming weeks.
In all, the 10-year US treasury yield initially ticks higher following the report but is little changed overall and equity futures are higher as we head into the market open.
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