Payden & Rygel: US Consumer Price Index

Payden & Rygel: US Consumer Price Index

15 november 2024

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Quick reaction to CPI report is that the core CPI month to month rounds up to 0.3% but implies a lower reading for the core PCE print later this month (perhaps a 0.2%), which would keep the Fed on track to cut by another 25 bps in December in our view.

Within the details, perhaps the most positive spin is that rents (+0.2% on the month) and core services (0.3% on the month versus 0.4% previously) so that some of the key drivers of prices pressures may be receding amidst the noise created by a jump in things like new vehicles, apparel, etc.

Zooming out, we are still of the mind that the election result does NOT change the trajectory of GDP or inflation (at least not yet), the Fed is still on track to cut overnight rates to 3.5% or so by the end of 2025, and that a growing U.S. economy along with a cutting Fed is a major boon to risk assets (stocks, credit sectors in the bond market). Rates meanwhile may have moved up too far too quickly on unfounded Trump fiscal fears. 

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