The annual Consumer Price Index rose 3.2% in October down from 3.7% the prior month, reaching its lowest yearly rate since early 2021 according to data released Tuesday by the Bureau of Labor Statistics. Core CPI, which excludes the volatile food and energy categories, rose 0.2% on a monthly basis, and 4% on an annual basis reaching its lowest level since September 2021.
The Producer Price Index for October showed more signs of slowing inflation, bolstering the case for no more hikes. US wholesale inflation fell 0.5% on a monthly basis, down from the 0.4% jump in September. The decline is also the sharpest monthly drop since April 2020.
According to the CME FedWatch Tool traders are even more encouraged and have taken another hike completely off the table. Futures now assign an 80% probability of a rate cut by May, despite economists warning that it’s unlikely that the Fed will ease monetary policy anytime soon unless economic conditions deteriorate significantly.
The U.S. benchmark experienced severe losses throughout 2022 as the Fed responded to record inflation and hiked the federal funds rate up from near-zero, to 5.25% – 5.5%, the highest level since 2001. Tightening campaigns typically precede recessions as higher borrowing costs cut into corporate profits and dampen consumer spending, but the U.S. economy has exhibited output growth and low unemployment levels throughout 2023.
This week’s stock and bond surge on news of a fresh decline in headline and ‘core’ U.S. consumer price inflation last month. The reports raised hopes the Federal Reserve won’t raise interest rates again during its current tightening cycle, thanks to a significant cooling in inflation. Even though Federal Reserve officials are refusing to fully rule out another interest rate hike traders are now virtually certain that the Fed will hold rates steady at its December policy meeting.
The market rallied to its strongest levels in months this week and while stocks are likely to continue to rise over the medium-term, as they continue to recover from last year’s steep losses, the index could struggle to return to its 2022 highs. In the short-term, a pull back to unwind the overbought momentum conditions can not be ruled out.
Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.
Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.
Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.
Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.
Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.
For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.
Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.
Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.
Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.
Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.
He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.
Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.
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