EconomyOur Take

Consumer prices rose 0.4% in October, more than expected, complicating Fed’s inflation fight

Summary

Consumer prices increased by 0.4 percent in October, exceeding expectations and presenting new challenges for the Federal Reserve's ongoing efforts to control inflation. This economic data arrives at a crucial moment as central bank officials evaluate their upcoming decisions concerning interest rates.

The report comes at a critical juncture for the Federal Reserve as it considers its next move regarding interest rates.

Our Take

The number landed right on Waller's line. Core CPI rose 0.3% in October, above the 0.2% economists expected, and headline CPI rose 0.4% versus 0.3% expected. A quarter-point hike on Dec. 8-9 is now fully priced, and the odds of a half-point move went from about zero to 13.6%, according to CME FedWatch data cited by CNBC. So the market still expects a quarter point, but the bigger hike is no longer off the table.

Stocks sold the news. SPY opened at $748.29, down 0.6% from Monday's close, and is near $746.70 at midday, down 0.8%. QQQ is down 1.3%, small caps (IWM) are down 1.3%, and long-term Treasuries (TLT) are down 1.6% as yields jump. Support is Monday's low at $741.03, then $733. Resistance is today's high at $752.14, then Monday's high at $755.42. As long as $741 holds, this looks like a pause in Monday's rebound; a break below it would put last week's lows back in play. The next test is the PCE inflation report later this month.

Opinion of Tech & Money Press. Not financial advice.

Source: Read the full story at Economy

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