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- 14 Nov 2024
- ICICI Securities
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US CPI CAME IN LINE WITH MARKET EXPECTATIONS
News: US inflation edged up in October but remain in line with market expectations. CPI on YoY basis increased by 2.6% in October 2024 after advancing 2.4% in September 2024. US consumer prices increased in October amid higher costs for shelter such as rents. Core-CPI which excludes energy and food rose 3.3% in October unchanged compared to previous month reading. CPI on MoM basis increased by 0.2% last month after rising by a similar margin for previous 3 months. Core CPI on MoM basis increased 0.3% in October as it did in August and September. Indexes that increased in October include shelter, used cars and trucks, airline fares, medical care, and recreation. Shelter prices rose 4.9% from year earlier accounting for over 65% of the total 12 month increase in the all items less food and energy index. Services less energy services index eased to 4.8% in October from 5.5% same month year ago. The energy index declined by 4.9% for the 12 months ending October, and the food index increased 2.1% over the last year. Dollar rallied yesterday while US Treasury yields were mixed after data showed an annual rise in inflation but in line with expectations. Dollar rose to 106.48, 10-year treasury note edged higher to 4.451% and 2-year treasury yield, which typically moves in step with interest rate expectations declined to 4.290%.
Views: US inflation increased in the previous month but not that much that it would derail another interest rate cut from US Federal Reserve in December. We expect US Federal Reserve to opt for smaller pace of rate cut in December meeting. However, the development on inflation has started to stall, which could lead to fewer interest rate cut next year.
Impact: Neutral