After the October consumer price index revealed a slowdown in inflation, US stocks rose as much as 4% early on Thursday. This could provide the Federal Reserve some breathing room in its current cycle of interest rate hikes.
The CPI increased by 7.7% annually, which was less than the 7.9% increase predicted by economists. In October, it increased by 0.4% monthly, which was less than the 0.6% increase that was anticipated. Core monthly inflation, which does not include food and energy, rose by 0.3%, which was less than expected at 0.5%.
Following the CPI data, assets started to move immediately, and the 10-year US Treasury rate immediately dropped by 20 basis points. JPMorgan predicted a CPI figure of 7.7% would result in a 2.5% to 3.5% increase in the S&P 500, so the move doesn’t come as a surprise to them.
“Hard to believe that a 7.7% year over year inflation rate is reason for celebration, but the 0.3% monthly change in core CPI reduces pressure on the Fed to raise rates another 0.75% at their next meeting,” Bryce Doty of Sit Fixed Income Advisors told Insider.
Original article posted here.