The United States announced on Tuesday (13) that the consumer price index (CPI) in November rose 7.1% year on year, lower than market expectations of 7.3%, and a sharp decline from the previous value of 7.7%, the smallest monthly increase since January this year; November core CPI of energy costs rose 6% year over year, lower than market expectations of 6.1% and a previous value of 6.3%. With the inflation index declining, the Federal Reserve (Fed) decided to raise interest rates by two meters in the early hours of Thursday (3pm), Taiwan time.
Month-on-month, November CPI rose 0.1%, well below market expectations of 0.3% and previous value of 0.4%; November Core CPI growth was 0.2%, below market expectations and previous value of 0.3%. cooled due to sharp rate hikes, and November’s core inflation rate, which attracted a lot of market attention, dropped significantly.
Falling used car and energy prices offset rising food prices
Judging by the details of data released Tuesday by the US Department of Labor, used car and energy prices fell sharply, one of the driving factors behind the cooling of inflation in November. Among them, the decline in the prices of the energy has offset the increase in food prices.
Food prices, more volatile, rose by 0.5% in November, slightly higher than the previous value of 0.6%; Energy prices fell 1.6% MoM, reversing October’s 1.8% increase, of which gasoline prices fell 2% MoM, lower than previous growth in the 4%. In addition, airline ticket prices decreased 3%, the previous value decreased 1.1%, second-hand car prices decreased 2.9% month-on-month, more than the decline of 2 .4% in October and the prices of medical services decreased by 0.7% MoM and the previous value decreased by 0.6%.
Housing costs register the smallest increase in 4 months, the prices of services slow down significantly
Notably, housing costs rose by 0.6% in November, the smallest increase in four months, with the report showing that housing was the largest contributor to the overall CPI rise. Housing costs are the largest component in the services sector, accounting for about a third of the overall CPI index.
While rents rose 0.8% in November and landlord equivalent rent rose 0.7%, the cost of being away fell 0.7% after surging in October. Private sector data shows that rents have stabilized in many US cities, but there is a lag between real-time changes and the Department of Labor data.
In addition, prices of major commodities fell for two consecutive months in November, down 0.5%, and prices of services excluding energy rose 0.4%, the smallest increase since July. Fed Chairman Jerome Powell recently highlighted the importance of another measure of inflation, the Personal Consumption Expenditure (PCE) price index, which he says is an important category for understanding future inflation trends. core inflation.
expert opinion
Bloomberg economists Anna Wong and Eliza Winger said November’s unexpectedly weak CPI was further evidence that deflation is taking shape and that by the end of January, when the Federal Open Market Committee (FOMC) meets , some Fed officials might conclude that “There is sufficiently compelling evidence that inflation is coming down,” and then started talking about a halt in interest rate hikes.
Greg Bassuk, CEO of AXS Investments, said he is optimistic about the soft landing of the US economy going forward. As time goes on until 2023, the market will continue to fluctuate due to inflation and other economic data. At the same time, it will also look up the Fed’s future currency from this data policy thread.
Robert Frick, a business economist at the Navy Federal Credit Union, said that inflation will not only boost stock market performance but also ease pressure on the Fed to raise interest rates, but more importantly the American people who have suffered from rising prices are finally truly relieved.
In addition, ahead of the release of November CPI figures, Wall Street’s two major investment banks, JPMorgan Chase and Goldman Sachs, both released their forecasts for stock market performance. The 7.1% figure means that JPMorgan Chase and Co.S&P 500 indexThe future is 2% to 3% bullish, while Goldman Sachs estimates a 4% to 5% increase.
Market reaction
Following the release of the data, major US stock indexes opened higher across the board, but then sharply trimmed their gains. before the deadline,Dow Jones Industrial Averageincreased by more than 250 points or 0.75%,Nasdaq Composite Indexrose nearly 230 points or nearly 2.1%,S&P 500 indexnearly 1.5%,Semiconductor PhiladelphiaThe index rose nearly 2.4%.
WE. 10-year Treasury bill yieldIt fell below its recent 3.5% level at 3.467%,dollar indexIt fell below the 104 level and is now at 103.945.
The CME Group FedWatch Tool shows that the probability of the Fed raising interest rates by 2 yards (50 basis points) on Thursday is 79.4%, and the probability of raising interest rates by 3 yards (75 basis points) is 20.6%. next year the interest rate will drop between 4.75% and 5%.
