Source: US Dept. of Treasury End of Day
• Yields fell sharply with the two-year Treasury note ending the week forty basis points lower at 4.32% while the five-year note dropped by thirty-eight basis points to 3.95%
• October’s Consumer Price Index came in lower than expected with headline prices advancing by 0.4% versus an expected 0.6% while Core CPI advanced by 0.3% versus 0.5%
• Equities surged and yields dropped on the CPI report as market participants interpreted the data as a highly encouraging sign that inflation is abating, potentially opening the door for less restrictive monetary policy from central bankers as they continue to work to stabilize price levels
• The Fed knows very well that one event does not represent a trend and though market participants rejoiced the latest inflation data, the FOMC needs to see a clear trend before considering a policy shift and are currently on pace to hike the Fed funds rate by an additional 50 basis points at their upcoming meeting on December 14th
