CPI Report Should Calm Bernanke's Inflation Concerns

by: Mick Weinstein

Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

U.S. Economy: Consumer Prices Decline, Reassuring Bernanke [Bloomberg]

Summary: The Consumer Price Index fell 0.5% in October, more than the expected 0.3%, thereby calming Fed concerns on inflation. The CPI was up 1.3% from a year earlier, the smallest y/o/y increase in four years. Many traders and economists see this as evidence the Fed won't raise rates further than the current 5.25% and may even begin cutting. Minutes of October's policy meeting indicate that inflation remained very much a matter of concern; there was no discussion of a rate cut. The core inflation figure (excluding food and energy) rose a less than expected 0.1%. Energy prices fell 7% in October, following September's 7.2% decline. Natural gas was down a record 7.7%.
Related links: Minutes from the Fed's October meetingWSJ coverage of the inflation announcement • Commentary: CPI Report Shows Commodity Prices and Inflation Integrally Linked , Use Common Sense To Decipher Fed Comments , David Fry's Daily Market Outlook

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