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US consumer prices rose less than expected in September, while jobless claims rose more than anticipated

Oct 12 • Morning Roll Call • 45 Views • No Comments

On Thursday we saw disappointing readings coming from the US, with the inflation slowing down in the previous month on rental costs and energy, as well as an increase in the number of people filing for unemployment.

The US consumer prices increased less than expected in September and the cause is seen in the slower increase of rental cost and declining energy prices. The CPI increased by 0.1% in September, while the expected increase was 0.2%.

Even though the readings are below the expected percentage rise, it should not alter the decision of the Fed to raise the interest rates in its policy meeting scheduled for December this year. It is important to mention that the Federal Reserve is closely monitoring the personal consumption expenditures (PCE) as an instrument of measuring the long-term inflationary pressure, especially because they exclude the food and energy categories that are highly volatile.

The Fed has already raised the interest rates three times until now and it is expected that they will go for the fourth raise as well, while they have another 3 rate hikes planned for 2019. On Wednesday, due to the expectations of higher interest rates, the US Treasury yields rose and in combination with the fears over slower global growth, as well as trade tensions have triggered a selloff, which led to Wall Street worst daily loss in 8 months, as per Reuters reports. This has provoked President Trump to renew his criticism of the Fed and express his disapproval of continuous rate hikes. He sees the Feds’ policies as too aggressive.

Continuing with the macro-economic news releases from the United States, the jobless claims rose to a surprising 214k, as opposed to the forecasted 207k. Nevertheless, the unemployment rate is still close to a 49 year low and the labor market in the US is still viewed as strong. The strong labor market is influencing the wage growth and at the same time increasing the expectations of the next rate hike.

ECONOMIC CALENDAR EVENTS FOR OCTOBER 12th

NZD Business NZ Manufacturing Index
AUD RBA Financial Stability Review
CNY Trade Balance
EUR German Final CPI m/m
EUR Industrial Production m/m
USD Prelim UoM Consumer Sentiment
USD FOMC Member Bostic Speaks

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