NEW YORK, Dec 18 - U.S. consumer prices rose less than expected in the year to November, and expectations for a January rate cut from the Federal Reserve inched up slightly as the report was impacted by the extended government shutdown.
The Consumer Price Index rose 2.7% year-on-year in November, the Labor Department's Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had forecast the CPI advancing 3.1%
The BLS did not publish month-to-month CPI changes after the 43-day shutdown of the government prevented the collection of October data. The October CPI release was canceled because the price data could not be collected retroactively.
Excluding the volatile food and energy components, the so-called core CPI increased 2.6% after rising 3.0% in September..
BONDS: Treasury yields fell, with the yield on the benchmark U.S. 10-year note down 2.2 basis points to 4.13%
FOREX: The dollar index wakened and was last down 0.12% to 98.25
The current sources of inflation are very visible, but not a large component of the consumer basket. Commodities, excluding food and energy, make up less than 20% of the CPI basket. Goods price deflation turned to inflation, but even that inflation hasn’t been as bad as feared. The Fed could look at the increase in the unemployment rate and the tame inflation reading as a reason to cut again. They’ll get some confirming or disconfirming evidence with the next releases before their January meeting.
These are good numbers, and basically the core rate moving to 2.6% on a year-over-year is really good news, and we saw the top line inflation year-over-year down to 2.7%. So this is good news for the Fed, good news for the markets, and this should begin to perhaps indicate the Fed is likely to be more generous going into the new year. In other words, these numbers, if they stick, will pave the way for not one, but possibly two, rate cuts sometime in the first quarter of 2026.”#USNonFarmPayrollReport #TrumpTariffs #WriteToEarnUpgrade #BinanceAlphaAlert #USJobsData