For its part, the core CPI rose 6.0% in year-on-year terms in November (compared to 6.3% the previous month) and rose 0.2% in monthly terms (compared to 0.3% previously). Both increases are also less than estimated.
“‘Better’ than expected numbers will ‘give wings’ to the rally that both Western fixed income and equities have been experiencing in recent months, as investors will take it for granted, if they haven’t already, that Inflation has peaked in the US”, they explained this morning in Link Securities.
“This, and always following this line of argument, will allow the Fed to end its rate hike process earlier and with a lower terminal rate than expected,” these experts add.
With this data, the fifth drop in inflation is marked, so it can be considered confirmed that the US economy began the disinflation process.
The market reaction has been euphoric to the data since the trend of price moderation is maintained, although the core – the index that the Fed is looking at – resists loweringr. Investors expect the central bank to step up the throttle on rate hikes as the CPI continues to retreat from its June highs. On Wall Street, the Dow Jones shot up 1.8% at the pre-open, the S&P 500 2.2% while the Nasdaq 100 rose more than 3% after the CPI data.
Source: Ambito
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