Perception of inflation is as important for investors as actual inflation, especially when both collaborate. A survey for the New York Fed showed that consumer expectation for 12-month inflation is currently 3.6%, down from 3.7%, while 5-year expectation fell to 2.7%. As a matter of fact, the swap market for bonds is presently suggesting that inflation in the month of November, 2024 will run at an annual rate of 2.1%, averaging 2.4% over the next 5 years. The market mood, meanwhile, was generally positive on Tuesday morning ahead of the Bureau of Labor Statistics inflation report, a sentiment confirmed by better than expected numbers. The October headline CPI rose 0.1% m/m with a y/y increase of 3.2%, while its core, which excludes food and energy, rose 0.3% for a y/y increase of 4.0%. Both gauges were lower than consensus. The latest Truflation number, which provides on a daily basis an accurate real-time inflation calculation, is 2.94%. Without shelter costs, inflation is right on target at 2.0%.
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By Hubert Marleau