The US Consumer Price Index (CPI) remained elevated for the third consecutive month, halting its previous six-month decline. Although inflation appears to be stabilizing, the Federal Reserve continues to face significant challenges in reaching its inflation targets.
Recent data indicated that the "super-core" services index, which excludes housing costs, experienced its smallest increase in three months at 0.31%, slightly below the annual average of 0.35%. This has led traders to increase bets on a potential interest rate cut by the Federal Reserve in December. Analysts suggest a 25 basis point rate cut could be possible during the Fed's final meeting of the year, as inflation, despite its rocky path, seems to be on a cooling trend. However, there is still a level of "catch-up" inflation present in the data.
Fed officials also recognized that the current short-term interest rates remain restrictive, potentially leading to a further cooling in the job market than anticipated, which could risk an economic recession if rates are not adjusted.
Following the release of the data, the US Dollar Index briefly fell by about 20 points, now at 105.74. US stock futures dipped, with Nasdaq 100 futures narrowing their decline to 0.17%. The 10-year US Treasury yield showed little short-term fluctuation, currently at 4.436%. Spot gold saw a brief surge of approximately $6, now priced at $2615.34 per ounce.
In terms of specific sectors, used car prices rose by 2.7%, marking the largest increase in over a year. Hotel prices climbed by 0.4%, possibly reflecting the impact of recent hurricanes. Meanwhile, airline fares continued to rise, and health insurance costs increased by 0.5% following data updates. Motor vehicle insurance saw a slight decrease. Housing prices accelerated with a 0.4% rise, reflecting an increase in owner-equivalent rent by the same percentage.
