The CPI Higher Than Expected
STOCK INDEX FUTURES
Mortgage applications in the U.S. increased 5.5% in the latest week, according to data from the Mortgage Bankers Association.
Jobless claims in the week ended November 6 were 267,000, as expected.
Consumer prices in October increased 0.9% when a gain of 0.5% was anticipated.
The November Atlanta Federal Reserve Business Inflation Expectations report will be released at 9:00 central time. The report in September showed inflation was anticipated to be 3.1% on an annualized basis. The Atlanta Fed’s Business Inflation Expectations survey provides a monthly measure of year-ahead inflation expectations and inflation uncertainty.
The 9:00 September wholesale inventories report is predicted to show a 1.0% increase.
Signs that inflationary pressures in the global economy are broadening and remain a concern.
The larger than estimated increase in the U.S. consumer price index puts pressure on the Federal Reserve to tighten credit conditions, which in turn, is bullish for the U.S. dollar.
The British pound pulled back toward the $1.35 level ahead of tomorrow’s preliminary estimate of third-quarter GDP growth in the U.K. Britain’s economy is expected to grow only 1.5% from the previous quarter.
INTEREST RATE MARKET FUTURES
Federal Reserve Bank of St. Louis President James Bullard said Tuesday that he is open to allowing the central bank’s massive holdings of cash and bonds to shrink at some point. Mr. Bullard, who was speaking in a virtual appearance, was commenting on what he would like to see happen once the U.S. central bank winds down the process of expanding its holdings.
The Treasury will auction 30-year bonds.
The 30-year Treasury bond futures are holding up well despite the bearish U.S. consumer price index report.
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