Daily update
Daily update
- We get US consumer price inflation data today. In one sense, the numbers are curiously unimportant. There are potentially competing forces at work on future US inflation. The fantasy owners’ equivalent rent measure should slow, but does not change anyone’s inflation reality. Oil prices may be lower, depending on US supply and Middle Eastern policies. Larger fiscal deficits, labor deportations, and consumer taxes via tariffs would all add to inflation pressures.
- While energy prices may add to the headline, the underlying disinflation pressures (deflation pressures in the case of durable goods) should be evident in the detail. That should allow the Federal Reserve to cut rates in December, to try and keep real rates stable.
- European Central Bank (ECB) speakers have tended to confirm market expectations for a December rate cut in Europe. Trade tensions have received some attention (retaliatory tariffs would add to Euro inflation, but would have a narrower effect).
- US President-elect Trump has announced some cabinet nominees, but not the Treasury Secretary markets are focused on. The backgrounds of some nominees differ from similar appointments eight years ago, which might warn against extrapolating from the earlier Trump term. Two businesspeople have been nominated to run a government efficiency department.
