Daily update
Daily update
- Yesterday’s consumer price inflation was stronger than the consensus forecast, and the expectation is that the Fed will continue its chant of “raise, raise, raise.” While the headline dictates what the Fed will do, the details dictate what consumers might do—which matters to investors.
- Team transitory was right—last year’s US inflation drivers have turned into deflation. Durable goods prices rose 3.8% m/m at their 2021 peak; in September, they were -1.1% m/m, the largest fall ever. Homeowners’ cost of living remains significantly lower than CPI. Over 40% of the core goods basket fell in price last month, as did 35% of the food basket. Consumers are seeing deflation as well as inflation, possibly increasing their willingness to consume. We get US retail sales data today.
- Chinese inflation data was slightly lower than expected—producer prices slumping below 1% y/y, and consumer prices rising on food price gains, but less than expected. Sluggish domestic demand is not giving much momentum to prices.
- The UK government is reported to be preparing to abandon its mini-budget, with speculation as to whether the chancellor or the prime minister is abandoned. Markets care most about the return of sensible fiscal policy, but there is also some interest in the overall competence of the government.
