In the US we saw both headline and core CPI rising less than expected in October resulting in what markets are calling a “Goldilocks” print (not too hot, not too cold). The former was unchanged from last month while the latter increased by 0.2% MoM (versus a 0.3% estimate).
Source: ZeroHedge, Daily Chartbook
Stocks rallied and the US dollar (USD) fell after the US Consumer Price Index (CPI) rose 3.2% over the year to October. That’s down from the 3.7% annual figure in September and August. Compared with the prior month, prices in October were flat. The last time that happened was July 2022.
“The inflation fever has broken in the United States,” said one analyst. On Wall Street, the Nasdaq rallied 2.4%, and the S&P 500 climbed 2.1% to 4503, its highest in more than two months. Small-cap indexes rallied even harder, and regional US banks jumped 6%.
On the bond market, the yield on the US 10-year note fell 20 basis points to 4.44%. Local yields for the Australian 3- and 10-year bonds both fell around 10 basis points to 4.2% and 4.6% respectively.
As this note is being written, the S&P/ASX 200 is around 1.4% higher. In other Australian data, wages grew at their highest rate on record in the third quarter, according to data released by the Australian Bureau of Statistics, growing by 1.3% in quarterly terms, hitting 4% over the year. The gains were bolstered by a planned increase in aged-care workers’ salaries, potentially representing the peak of the current upward post-pandemic surge.
The Australian dollar has also spiked, edging above USD 0.65 following the CPI result in the US.
Source: AFR, ABS
Disclaimer: Clime Asset Management Pty Limited | AFSL 221146 | ABN 72 098 420 770. The information provided in this post is intended for general use only. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information contained therein. Please consider the relevant disclosure document/s before investing in one of our products. Investment in securities and other financial products involves risk. An investment in a financial product may have the potential for capital growth and income but may also carry the risk that the total return on the investment may be less than the amount contributed directly by the investor. Investors risk losing some or all of their capital invested. Past performance of financial products is not a reliable indicator of future performance or returns.
