Latest Inflation Numbers and Discussion

JoeWras said:
And today Powell hinted at pumping the brakes. This doesn't mean the quarter point is out this December, but it almost certainly means it won't be 1/2. I suppose he also opens the door to doing nothing based on the data they get between today and the Dec meeting.
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Did someone suggest the cut might be 50 bp?
 
Wolf's data dig today on services inflation:


After More Up-Revisions, “Core” PPI & “Core Services” PPI Inflation Get Much Worse, Accelerating All Year​

The culprit is services. The PPI for final demand services accelerated to 3.2% month-to-month annualized in October. September was revised higher today to +2.3% annualized from the unrevised +2.0% reported a month ago, seasonally adjusted, according to data from the Bureau of Labor Statistics today. Prior months were revised higher as well.
 
When I try to read the PPI report, I feel like I am reading a foreign language. That's some serious hard core specialized economic lingo. (Final, intermediate, stage 1, 2, 3, 4. And so on.)
 
The glide path to 2% inflation is getting bumpy. IMO, we are bumping into air currants created by massive Federal deficit spending. YMMV.
 
October PCE is 2.3% year over year.

Personal Income and Outlays, October 2024 | U.S. Bureau of Economic Analysis (BEA)

Personal income increased $147.4 billion (0.6 percent at a monthly rate) in October, according to estimates released today by the U.S. Bureau of Economic Analysis (tables 2 and 3). Disposable personal income (DPI), personal income less personal current taxes, increased $144.1 billion (0.7...
www.bea.gov www.bea.gov

So maybe no Fed cut in December.
 
Gumby said:
October PCE is 2.3% year over year.

Personal Income and Outlays, October 2024 | U.S. Bureau of Economic Analysis (BEA)

Personal income increased $147.4 billion (0.6 percent at a monthly rate) in October, according to estimates released today by the U.S. Bureau of Economic Analysis (tables 2 and 3). Disposable personal income (DPI), personal income less personal current taxes, increased $144.1 billion (0.7...
www.bea.gov www.bea.gov

So maybe no Fed cut in December.
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Interestingly T-bill rates backed off.
 
Buying at auction yesterday or Monday was fortuitous. Due to a tendency to remember negative things more strongly, my memory is that auctions always find the dip. Not this time, for once.
 
The jobs report for November was largely as expected. I personally was somewhat surprised by the upward revisions to September and October-but not sure the expectation of downward revisions has changed for me

Unemployment edged up. Labor participation edged down. Part time employment for.economic.reasons edged up. And it is taking people longer to find jobs. These items surely are the types of things Fed will be looking at.

The downward trend in new jobs is clear. There is a good graphic in the article below.


The market is expecting a cut later this month. Bonds rallied nicely. I would not be shocked if they cut then signaled a pause (always data driven of course).
 
CPI report is out: https://www.bls.gov/news.release/pdf/cpi.pdf

The adjusted seasonal month to month is up 0.3%. (Gumby usually pipes in here with the unadjusted index, which is down slightly MoM.) The unadjusted year over year is 2.7%

No surprises to the experts. Slight tick up. It seems a level between 2.5% and 3.0% has settled in.

A few things I found interesting. New and used vehicles have irritatingly started to tick up again. Food away from home continues on its ride up. Basically, "services" inflation continues. To me, that's about anything that requires someone here in the USA to do something, versus importing something made overseas.
 
Well from my POV (things I watch and looking for the silver linings) while we still have too much inflation, it's not nearly as bad as it has been the past few years. And higher annual inflation numbers also raise the IRMAA tiers, which I do like.
 
JoeWras said:
CPI report is out: https://www.bls.gov/news.release/pdf/cpi.pdf

The adjusted seasonal month to month is up 0.3%. (Gumby usually pipes in here with the unadjusted index, which is down slightly MoM.) The unadjusted year over year is 2.7%

No surprises to the experts. Slight tick up. It seems a level between 2.5% and 3.0% has settled in.

A few things I found interesting. New and used vehicles have irritatingly started to tick up again. Food away from home continues on its ride up. Basically, "services" inflation continues. To me, that's about anything that requires someone here in the USA to do something, versus importing something made overseas.
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I thought the market might be spooked by the 0.3 month to month and 2.7% YOY inflation numbers, but no. In fact t-bill rates dropped a little more, and NASDAQ broke 20,000 for the first time. The longer treasuries have been creeping up again since last Friday.
 
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2.7% annual inflation. 3.3% Core inflation. The current Ibond rate is 3.11% for the newest bonds. After taxes, new buyers will be lucky to break even with inflation. Many won’t. Not so good.
 
Canada cut .5% and the ECB cut by .25% this morning.

Swiss Central Bank cut 50 basis points and there's some talk of deflation.

Is the Fed going to feel peer pressure?
 
explanade said:
Canada cut .5% and the ECB cut by .25% this morning.

Swiss Central Bank cut 50 basis points and there's some talk of deflation.

Is the Fed going to feel peer pressure?
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With regard to this meeting? I don't think so. A cut is baked in the cake at this point.
 
Fed cut 25 basis points as expected, said there will be fewer cuts next year.

Market doesn't like, Down down 200 points following the announcement.
 
explanade said:
Fed cut 25 basis points as expected, said there will be fewer cuts next year.

Market doesn't like, Down down 200 points following the announcement.
Click to expand...
The forecast of future rate cuts surprised the market somehow.

People I guess not paying attention.
 
Montecfo said:
The forecast of future rate cuts surprised the market somehow.

People I guess not paying attention.
Click to expand...
That’s what I think! The latest 12 month annual inflation reading wasn’t that tame. The Fed has still got to fight inflation and not let it creep back up to/above 3%. People often get a little giddy with their December rallies. I guess this woke a bunch of partyers up.
 
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