October CPI Cooldown Eases Yield Pressure
What Happened
October CPI, reported November 14, rose 3.2% year over year and was flat on the month. Both headline and core came in under expectations. Treasury yields slid, with the 10-year dropping below 4.5%, and equities rallied on hopes the hiking cycle was done.
What It Means
Disinflation finally showed up in shelter and goods, giving the Fed space to pause. Futures quickly priced out another hike and pulled forward cut expectations for mid-2024. The move also eased pressure on risk assets that had been grinding under higher real yields.
What I Think
One print does not seal victory, but it changes tone. I expect the Fed to sit tight while watching services inflation and wages. The market’s eagerness to price cuts could be tested if growth holds; still, the peak-rate narrative now has data behind it.
Market Terms
- Disinflation signal – Slower shelter and goods prices pulling CPI below forecasts.
- Peak-rate narrative – Markets betting the hiking cycle is effectively done after this print.
- Cut pricing pull-forward – Futures moving 2024 easing expectations closer.
- Real-yield relief – Softer inflation easing pressure on risk assets via lower real rates.
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