Market Wrap – US CPI Ticks Down

Market was in a more positive mood after the annual inflation rate in the US slowed for a fourth month to 7.7% in October of 2022, the lowest since January, and below market forecasts of 8%.

Stocks moved higher and the US dollar sold-off as the CPI report indicated that the Fed may only implement a 50-basis point hike based upon these latest CPI figures.

This was compares with 8.2% in September and compared to the previous month, the CPI rose 0.4%, the same as in September and below expectations of a higher 0.6% rate.

The index for shelter contributed over half of the monthly all items increase, with the indexes for gasoline and food also increasing. Shelter was being watched closely by analyst.

Still, figures continue to point to strong inflationary pressures and a broad price increase across the economy, mainly in the services sector while prices of goods have benefited from some improvements in supply chains.

Additionally, the US CPI was at 298.012 points in October, compared with 296.808 points in the prior month and market forecasts of 296.583 points.

On the flipside, jobs data came in worse than the market was expecting. This is something that the Fed have been very worried about, meaning rising unemployment.

Data today revealed that in the week ending November 5, the advance figure for seasonally adjusted initial claims was 225,000, an increase of 7,000 from the previous week’s revised level.

The previous week’s level was revised up by 1,000 from 217,000 to 218,000. The 4-week moving average was 218,750, a decrease of 250 from the previous week’s revised average.

Moreover, the previous week’s average was revised up by 250 from 218,750 to 219,000. This all alludes to the fact that the US economy may be quickly slowing day as unemployment is a leading indicator.