Consumer Prices Archives - Fountainheadinvesting

A Flicker Of Hope After The Fed Flameout

12/20/2024

The Fed’s favored inflation gauge – core PCE – cools slightly in November

The core PCE Price Index, the Federal Reserve’s preferred inflation measure, edged up 0.1% M/M in November, less than the +0.2% consensus and cooling from the +0.3% pace in October. Personal income and spending also came in slightly lower than expected in the month.

On a year-over-year basis, core PCE increased 2.8%, just under the 2.9% consensus, and running at the same pace as in October.

PCE Price Index, which includes food and energy, also ticked up 0.1% M/M vs. +0.2% consensus and +0.2% prior.

That measure translated to a 2.4% Y/Y increase, less than the +2.5% consensus, but slightly hotter than the 2.3% rise in October.

Personal income: +0.3% M/M vs. +0.4% expected and +0.6% prior.

Personal outlays: +0.4% M/M vs. +0.5% consensus and +0.4% prior.

At the time of writing, premarket S&P 500 Futures are down 0.6% after being down 1.5% overnight after the second stop-gap funding bill failed miserably to get through the House of Representatives.

January Inflation Surprises: Rates Climb Above 3%

Inflation rose more than expected in January, still hanging over 3%

MoM January Consumer Price Index: +0.3% vs. +0.2% expected and +0.2% in December (revised from +0.3%).
YoY +3.1% Y/Y vs. +3.0% expected and +3.4% prior.
Core CPI, which excludes food and energy:
MoM+0.4% vs. +0.3% expected and +0.3% prior.
YoY +3.9% Y/Y vs. +3.7% expected and +3.9% prior.

The biggest factors:

The shelter index increased 0.6% in Jan. after rising 0.4% in Dec.

Health insurance climbed 1.4% on the month, the most since September 2022. Vehicle insurance rose the same amount, and that’s on top of a long string of outsize gains. The year-on-year increase in car insurance continues to be the biggest since 1976.

Treasury yields soared across the curve. Both two-year and 10-year yields jumped about 15 bps.

The market sees no chance for a rate hike in March. The odds for an increase in May are about 1/3. A hike in June is fully priced in, though.