Investors turn their focus to next week’s I reading
On Tuesday, investors will digest one of the most important data points the Fed will consider in its next interest rate decision: the October Consumer Price Index (I).
The report is expected to show headline inflation at 3.3%, a slowdown from September’s annual price increase of 3.7%, according to Bloomberg estimates. Over the previous month, consumer prices are expected to rise 0.1% in October, a slower rate than the 0.4% monthly increase in September.
Lower energy costs are likely to have made the headline numbers yield smaller gains.
On a “core” basis, which excludes the more volatile costs of food and gas, prices in October are expected to rise 4.1% from a year ago — consistent with the year-over-year increase seen in September, according to Bloomberg data. Monthly core prices are expected to rise by 0.3%, which is also in line with the monthly rise in September.
“The weak increase in October’s core I is likely to be overshadowed by another strong reading in the core,” Wells Fargo wrote in a note ahead of the report’s release.
The bank said the core I was likely to indicate “slower progress in inflation,” adding: “While the decline in housing inflation is likely to resume in October, the steady withdrawal from health insurance is set to turn into a boost with this month’s release.” “It is likely that the commodity contraction has paused.” “.
The Wells Fargo team expects the core I to still rise about 3% annually by this time next year, noting that “slowing inflation in the coming months does not necessarily mean a victory over inflation.”
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