Recent macroeconomic reports show that US inflation could be slowing. Hopes that the Federal Reserve may be less aggressive in its December meeting are growing. While Fed Governor Christopher Waller said on Sunday that the central bank is not “softening” their stance against inflation, Fed Vice Chair Lael Brainard stated on Monday that the pace of interest rates hikes is likely to slow soon. At the time of writing, the CME FedWatch Tool showed a higher probability of a 50 basis point rate hike at the December Fed meeting.
Based on the data published by the US Bureau of Labor Statistics, the annual US headline inflation rate eased for a fourth consecutive month to 7.7% in October, standing at its lowest since January. Confirming the downsizing of inflationary pressures, yesterday both the annual headline and core US Producer Price Index (PPI) data were below market forecasts.
However, according to the US Census Bureau, retail sales in October 2022 increased to 1.3% month-over-month, from 0.0% in September and surpassing the market forecasts of 1.0%. Year-over year retail sales was 8.3% in October 2022, following an upwardly revised 8.6% the prior month. Core retail sales, which excludes automobiles, rose 1.3%. All eyes are now on the upcoming inflation data and the Fed’s last monetary policy meeting of 2022.
US equity futures continued to decline following robust retail sales.