Stock markets continue to surge higher towards the end of week with the Dow Jones Industrial Average on course for its best October performance since 1987.
The notion that the FED may soon start to cool down its aggressive rate hike cycle caused all the major averages to post gains of over 2 percent this afternoon.
The US September PCE core inflation came in at +0.5% month on month vs +0.5% expected. The market was encouraged by this data as equity futures pared losses and yields come down from the highs.
Inflation was generally in line with estimates and there have been so many hot readings that the market, that anything around consensus is seen as being good news.
Breaking down the data Core PCE year on year came in +5.1% vs +5.2% expected while Personal income +0.4% vs +0.3% expected. Personal spending was down+0.3% vs +0.4% previously.
Prices for services increased 0.6 percent, ed by housing and transportation services. Food prices increased 0.6 percent and energy prices decreased 2.4 percent.
US Pending home sale data came in very badly today, which is not surprising as the mortgage rate is the highest since April 2002.
US mortgage rates are now above 7% which is more than double levels from a year ago. Monthly payments are near $1000 more for a median priced home vs. the beginning of the year.
Today’s data showed that Pending home sales for September 2022 tumbled to -10.2% vs. -5.0% expected. The stock market only continued to rise on this bearish report.
The University of Michigan October final consumer sentiment 59.9 vs 59.8 expected. The fact that sentiment is rising is a good indication of how investors feel.