Economists Break Down November Inflation Numbers: What Lies Beneath The Surface For The Fed?
Portfolio Pulse from Piero Cingari
The November CPI report showed a slight easing in headline inflation to 3.1% and a steady core inflation rate at 4%. Economists believe the Federal Reserve will maintain its current stance against inflation, with no immediate dovish shift expected. The report indicated high inflation in specific categories like car insurance and transportation. Market analysts expect the Fed to avoid discussing rate cuts until possibly the second half of 2024. Treasury yields remained stable, and markets are pricing in rate cuts starting May 2024. The U.S. dollar index fell slightly, while the SPY ETF was flat and the QQQ ETF was slightly higher post-report.
December 12, 2023 | 4:46 pm
News sentiment analysis
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NEGATIVE IMPACT
The Invesco DB USD Index Bullish Fund ETF (UUP) saw a minor decline of 0.1% following the CPI report, reflecting a slight weakening in the U.S. dollar index.
The UUP ETF, which tracks the U.S. dollar index, experienced a small decline, likely due to the mixed CPI data and unchanged rate expectations, indicating a short-term negative impact on the ETF.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) remained flat after the CPI report, indicating that the market had largely anticipated the inflation figures and the Fed's likely response.
The SPY ETF's lack of movement suggests that the inflation data was in line with market expectations and that investors are waiting for more significant news to drive price action.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
The Invesco QQQ Trust (QQQ) saw a slight increase following the CPI report, potentially due to the tech sector's sensitivity to interest rate expectations and inflation data.
The slight uptick in the QQQ ETF may be attributed to the tech sector's positive reaction to the steady inflation rates and the market's anticipation of future rate cuts, which could benefit growth stocks.
CONFIDENCE 75
IMPORTANCE 55
RELEVANCE 65