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Macro Report

**Flash Report – October Consumer Price Index (CPI)**

Takeaway:

This morning, CPI came in below the median forecast on Bloomberg. A welcome sign of continued relief from rising prices after recent indicators and reports have been pointing to sticky prices.

Notes:

The YoY US consumer price index remained unchanged for October, staying at 3.2%, when expected an increase to 3.4%.

The MoM Core CPI (ex. food and energy) decreased to 0.2%, below market expectations and September’s print of a 0.3% increase. The YoY rate slowed to 4% – this is the slowest increase since September 2021 and below the expectations of 4.1%.

This slower than expected CPI growth bolstered view that the Fed’s rate hikes are done, causing Treasury yields to plunge.

  • Shorter-maturity Treasury yields led the decline, falling at least 20 basis points.
  • 10-year note’s yield fell by 19 basis point to 45, the lowest level since September.
  • 30-year bond’s yield fell 14 basis points to 65%. It also pulled forward market expectations for when the FED will pivot and start cutting rates.
  • Swaps contracts indicate the effective funds rate will fall to nearly 33% by December 2024 from 5.33% currently, a full 100 bps cut.


October Headline (dotted) and Core (solid) CPI

Breakdown of CPI Components