Economic news

Revised US December CPI gives Fed a bit more breathing room

2024.02.09 10:38


© Reuters. FILE PHOTO: Price tags are pictured at a Ralphs grocery retailer, which is owned by Kroger Co, in Pasadena, California U.S., December 1, 2016. REUTERS/Mario Anzuoni/File Photo

WASHINGTON (Reuters) – U.S. month-to-month client costs rose lower than initially estimated in December, revised authorities information confirmed on Friday.

The client worth index rose 0.2% in December as an alternative of 0.3% as reported final month, annual revisions of the CPI information printed by the Labor Department’s Bureau of Labor Statistics (BLS) confirmed. But information for November was revised as much as present the CPI growing 0.2% relatively than 0.1% as beforehand estimated.

The revisions emanated from the annual recalculation of seasonal adjustment components.

MARKET REACTION:

STOCKS: U.S. inventory futures prolonged a slight acquire and have been final up 0.2%, nonetheless pointing to a strong opening on Wall StreetBONDS: The U.S. Treasury 10-year yield fell and was 4.1618%; Two-year yields fell to 4.467% FOREX: The was 0.08% decrease

COMMENTS:

GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY, TD SECURITIES, NEW YORK

“We’re still waiting for a lot of the details. My thoughts are going to be relatively high level. The market reacted to the downward revision to the headline for December, because the headline rounded down to 0.2% rather than to 0.3%. On an unrounded basis we went from 0.3 to 0.23%, so it’s a significant downward revision to headline inflation for December. But core inflation actually remained unchanged at 0.3%. and I think that’s really the more important thing. So, I suspect the market’s trying to figure out what to do here, and we’re still absorbing a lot of the details, but at first glance you’re not really seeing as much of a change to inflationary trends on a month-to-month basis as we did last year. It does seem like the revisions were a little bit more modest this time around.“

STEVEN RICCHIUTO, U.S. CHIEF ECONOMIST, MIZUHO SECURITIES USA LLC, NEW YORK

“The revisions aren’t going to make the Fed cut rates.

“The point really comes down to they’re in no rush. The market’s in a rush, (but) the Fed is sitting there saying we’re not in a rush. Actually, things are really pretty good from their perspective.

“The market is rushing because the leveraged investors have negative carry.”

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN“The revisions were much ado about nothing. This is becoming a trend where a Fed official mentions a data release once and then everyone waits with bated breath only to find out that it’s a bunch of noise. Chair Powell mentioned the preliminary reading of the University of Michigan Consumer Sentiment index as being important and now it’s not. The super core inflation was mentioned as important and now it’s not. Three-month annualized inflation used to be important but now apparently it’s not. The same thing has happened with the CPI revisions. Maybe Fed references to data releases is more a contrary indicator of what’s important than anything that they’re actually looking at.”

ART HOGAN, CHIEF MARKET STRATEGIST, B RILEY WEALTH, NEW YORK

    “A year ago, when these revisions came out, they were advanced higher and that changed everybody’s attitude about the ultimate level and duration of monetary policy.”

    “Today’s revisions are much more modest than they were last year. We’re in a different place this year in so much as we know that the Fed is done raising rates and this (data) wasn’t going to change that opinion.”

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