Live Markets: Tuesday data: CPI, CPI, CPI - and NFIB

Cushman & Wakefield

12/12/2023 16:49

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      Major U.S. stock indexes up slightly
    

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      Financials lead S&P 500 sector gainers; energy weakest
    

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      European 600 STOXX index down 0.2%
    

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        * 
      U.S. 10-Year Treasury yield slips to ~4.22%
    

  
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    TUESDAY DATA: CPI, CPI, CPI - AND NFIB
Data released on Tuesday was all about inflation, even when it
wasn't.    
    The prices urban consumers pay for a basket of goods
unexpectedly inched higher last month.
    The Labor Department's Consumer Price Index (CPI)
 USCPI=ECI  edged up 0.1% in November, defying analyst
expectations for a flat reading.
    But year-on-year, CPI inched down to 3.1% from October's
3.2% print.
    Stripping out volatile food and energy prices, core CPI rose
on monthly and annual bases by 0.3% and 4.0%, respectively,
keeping pace with the prior month.
    Diving below the surface, consumers no doubt enjoyed the 6%
drop in gasoline prices, which helped ease the sting of the 0.5%
increases in services and owners' equivalent rent.
    So what does all of this mean for Powell & Co, who convene
today for their two-day monetary policy meeting?
    "I'm expecting a dovish dot plot, but the statement will be
consistent; the fight against inflation has not been won and the
Fed will continue to move as necessary," says Peter Cardillo,
chief market economist at Spartan Capital Securities. 
    "(The CPI report) doesn’t change the fact that the market is
pricing in a rate cut by June," Cardillo adds. "But if these
numbers continue to come down this gradually, the market could
be wrong and the first interest rate cut will come later."
    "Yes, inflation remains elevated. It’s coming down at a
snail’s pace, but it’s heading in the right direction."
    The graphic below shows what a snail's pace looks like,
charting major U.S. indicators on their meandering journey back
down toward the Fed's 2% target.
    While we're on the subject, let's take a look at real wage
growth, which for our purposes is average hourly wage growth
minus core CPI.
    After running in negative territory for 21 months, real
wages have been bouncing along the zero line since September.
    So while the prices of consumer goods continue to rise -
albeit at a slower pace - wages are just beginning to catch up.
    This suggests, for now, that the American consumer - who
shoulders about 70% of the U.S. economy - will continue to be
able to spend.
    All this time it's been CPI-this and CPI-that and we've
neglected today's also-ran data - the National Federation of
Independent Business' (NFIB) Optimism index  USOPIN=ECI .
    It shows the mood among small business owners grew a tad
gloomier last month, inching down to 90.6 from 90.7, marking the
index's 23rd month below its long term average of 98.
    "Job openings on Main Street remain elevated as the economy
saw a strong third quarter," writes Bill Dunkelberg, NFIB Chief
Economist. "However, even with the growing economy, small
business owners have not seen a strong wave of workers to fill
their open positions. Inflation also continues to be an issue
among small businesses."
    Indeed, while inflation worries are still at the forefront
of most survey participants' minds, they identified labor
quality as their most important problem.
    "Though the labor market is cooling as evidenced by the
slowdown in the underlying pace of job growth and falling job
vacancies, wage growth remains stubbornly above the pace that
would be consistent with the Fed's inflation target of 2%," says
Bernard Yaros, lead U.S. economist at Oxford Economics. "The
latest NFIB report reinforces this point."
    It should be noted that NFIB is a politically active
membership organization, whose PAC skews heavily conservative.
    (Stephen Culp)
    *****
  
    FOR TUESDAY'S OTHER LIVE MARKETS POSTS:
    
    SOUTH KOREA'S RETAIL TRADERS FLOCK TO FOREIGN LEVERAGED ETFS
- CLICK HERE
    
    CUSHMAN & WAKEFIELD SEES OFFICE VACANCY PEAKING IN 2025 -
CLICK HERE
    
    S&P E-MINIS EDGE DOWN IN WAKE OF CPI DATA - CLICK HERE
    
    CAPITAL GOODS HEADED FOR "NEW NORMAL" - MS - CLICK HERE
    
    HIGHER FOR LONGER "NOT THE PANACEA" FOR GBP - BOFA CLICK
HERE
    
    CAC AND DAX SCALE NEW RECORD PEAKS CLICK HERE
    
    EUROPEAN SHARES SEEN STEADYING AT 22-MONTH HIGHS CLICK HERE
    
    UK LABOUR DATA TAKES THE STAGE BEFORE US INFLATION CLICK
HERE
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Inflation gauges    https://tmsnrt.rs/48i8b1n
Real wages    https://tmsnrt.rs/41mgHu0
NFIB    https://tmsnrt.rs/3GF1Ukn
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>