US markets react as November inflation data cools

The U.S. economy is showing signs of cooling inflation, with the personal consumption expenditures (PCE) price index rising only 0.1% in November, less than expected. According to a recent Reuters report, this represents a softer trajectory for inflation compared with October’s 0.2% increase, providing some comfort to markets facing the Fed’s current monetary stance.

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Data from IndexBox showed that the PCE price index rose 2.4% in the year to November, up from 2.3% in October. Excluding the volatile food and energy categories, the core personal consumption expenditures index also rose 0.1%, compared with an unrevised gain of 0.3% last month. Despite these figures, annual core inflation remained at an increase of 2.8%.

Stocks showed cautious optimism, with the S&P 500 managing to pare losses to -0.51%. Meanwhile, U.S. Treasury yields fell; the 10-year yield fell to 4.506% and the two-year yield fell to 4.259%. The U.S. dollar index fell 0.42%.

Market analysts had mixed reactions to the data. Chris Zaccarelli, chief investment officer at Northlight Asset Management, said: “The market woke up in a bad mood – an unexpected government shutdown and a more hawkish Fed than expected were the main culprits – but this morning’s inflation data was lower than expected.” and eliminates some of the advantages. Brian Jacobsen, chief economist at Annex Wealth Management, commented on the inconsistency between the data and the Fed’s hawkish stance, saying “Powell must be tired of data undermining what he’s saying.” “

Although macroeconomic indicators were weaker than expected, Peter Cardillo, chief market economist at Spartan Capital Securities, believes this may not significantly change the Fed’s course, but insisted that it “should relieve some stress in the bond market” .

The lower-than-expected growth in spending has raised questions about consumer behavior, but many experts insist that underlying economic fundamentals have not changed. As markets digest these findings, all eyes are on the Fed going forward as they navigate this complex landscape.

Source: IndexBox Market Intelligence Platform