Explore Topics and Trends impacting today's markets

Is inflation finally beginning to moderate? 

 

During the past year and a half, inflation has soared around the Western world. But finally, on Nov. 10, we got a piece of good news: U.S. inflation unexpectedly moderated in October, coming in 0.2% lower than expected. Markets rejoiced. Bond yields plunged, and equities rallied. 

The overall CPI inflation has now moderated from 9.1% in June to 7.7% in October. But much of the reason for the moderation in the overall CPI comes from energy prices, which have been falling in recent months.

Meanwhile, the story of core inflation is not so positive. Excluding food and energy, CPI slipped from 6.6% to 6.3% year-on-year. 

The single largest component of inflation is housing, specifically rent and owners’ equivalent rent. And housing costs continue to soar, rising nearly 7% year-on-year. 

The labor market is slowing but remains very tight, with average hourly earnings still growing by nearly 5% per year. But even with the economy back to full employment, employers are still looking to hire an additional 10.7 million workers – far more than they were looking to hire pre-pandemic. 

As such, it may be slightly premature to celebrate a moderation in inflation. 


 

 

OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance and economics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

All examples are hypothetical interpretations of situations and are used for explanation purposes only. The views expressed in OpenMarkets articles reflect solely those of their respective authors and not necessarily those of CME Group or its affiliated institutions. OpenMarkets and the information herein should not be considered investment advice or the results of actual market experience. Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade. BrokerTec Americas LLC (“BAL”) is a registered broker-dealer with the U.S. Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (www.FINRA.org), and is a member of the Securities Investor Protection Corporation (www.SIPC.org). BAL does not provide services to private or retail customers.. In the United Kingdom, BrokerTec Europe Limited is authorised and regulated by the Financial Conduct Authority. CME Amsterdam B.V. is regulated in the Netherlands by the Dutch Authority for the Financial Markets (AFM) (www.AFM.nl). CME Investment Firm B.V. is also incorporated in the Netherlands and regulated by the Dutch Authority for the Financial Markets (AFM), as well as the Central Bank of the Netherlands (DNB).

©2022 CME Group Inc. All rights reserved