Following the unveiling of the CPI and PPI figures, the broader market has eagerly awaited signs of a potential moderation in month-to-month inflation numbers, and these expectations have materialized. A discernible trend of inflation deceleration is emerging, indicating a possible halt to Federal Reserve rate hikes—a prospect aligned with Jerome Powell’s vision of a soft landing for the economy. This soft landing also sets the stage for a plausible scenario of the Federal Reserve initiating rate reductions in the near future.
Consumer Price Index
While the report surpassed inflation expectations, fostering optimism for an impending soft landing, a note of caution is warranted. The data reveals that the primary contributor to the largest reduction was the substantial decrease in gasoline prices from the preceding month. Although the overall cost of living has not risen, remaining stable, upcoming reports still merit close scrutiny.
In October, the consumer price index remained unchanged from the previous month but exhibited a 3.2% increase from a year ago. The core CPI, excluding volatile food and energy prices, rose by 0.2% and 4%, respectively, slightly below the forecasted 0.3% and 4.1%. This annual rate represents the smallest increase since September 2021.
Producer Price Index
The Producer Price Index for final demand recorded a 0.5% decline in October, following a 0.4% advance in September. This decline is the most significant decrease in final demand prices since April 2020. On an unadjusted basis, the index for final demand rose by 1.3% for the 12 months ending in October.
Primary Mortgage Market Survey Index
Recent weeks have witnessed a consistent decline in rates, with 15-Year FRM rates decreasing by -0.05% to a current rate of 6.76%, and 30-Year FRM rates declining by -0.06% to a current rate of 7.44%.
MND Rate Index
In contrast, 30-Year FHA rates increased by -0.21% to a current rate of 6.70%, and 30-Year VA rates saw a slight uptick of -0.02%, reaching a current rate of 6.72%.
Jobless Claims
Weekly jobless claims exceeded expectations this week, showing a slight uptrend with initial claims rising to 231,000 compared to the anticipated 220,000. The previous week reported 218,000 claims.
What’s on the Horizon
Thanksgiving week, occurring next week, will witness a reduction in the data release schedule. Key reports include U.S. leading economic indicators, initial jobless claims, and the final consumer sentiment report for the quarter.
