Market Extra: Financial markets cling to hope that inflation is easing ahead of October’s CPI data

by | Nov 9, 2022 | Stock Market

With the next major U.S. inflation report about to land on Thursday, traders and investors continued to cling to hopes that the data will contain enough signs of easing price pressures to help move the needle on the Federal Reserve’s December rate hike.Economists and traders are expecting Thursday’s consumer-price index report for October to produce the first annual headline reading below 8% of the past eight months. In addition, fed-funds futures reflected a 57% chance on Wednesday that policy makers will back off their series of jumbo rate increases of 75 basis points and hike by a smaller increment of half a percentage point next month, even though there’s still one more inflation report to consider after the October reading arrives.There’s no shortage of material for financial markets to parse in Thursday’s CPI report. On one hand, October’s CPI is likely to include another sharp monthly reading, of 0.6% versus 0.4% in September, based on the forecasts of economists polled by The Wall Street Journal. On the other hand, the monthly core reading, which strips out food and energy to provide a less volatile read on inflation, is seen as dropping to 0.5% from 0.6% previously. The attention-grabbing annual headline rate, which can impact households’ expectations, is also seen as sliding to 7.9% in October from 8.2% in September.“We are hoping for the best, but preparing for the worst because the data has continued to surprise,” said Brian Jacobsen, a senior investment strategist at Charlotte, North Carolina-based Allspring Global Investmen …

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