Core CPI for November was +0.30% M/M matching both the estimate and the prior period. Headline M/M CPI was 0.30% (0.30% est.), outpacing October’s +0.20% gain. All CPI categories were near enough to estimates to spark a rally in bond prices, driving yields lower.
U.S. Treasury yields are lower in all tenors, led by the 4-year’s -0.043% decline. Having inflation seemingly under control clears the Fed’s path for a rate cut at the FOMC’s next policy meeting a week from today. The likelihood of a 25bps cut is a virtual lock now with a 99.9% implied probability. This will be the Fed’s third cut this year for a total combined cut of 1.00%.
The dollar is mixed vs. the major currencies in moderate overnight ranges. The widest gains are +0.26% vs. EUR, and +0.22% vs. AUD. Leading losses are -0.34% vs. ZAR and -0.44% vs. CAD. The U.S. dollar index is +0.16%, its 4th consecutive daily gain.
Gold continues to rally from the mid-November low of $2,536.71, now at $2,708.45. A close above $2,712 will bring $2,750 within range, tempting the market to test resistance at the $2,790.15 all-time-high set on October 31st.
The Bank of Canada cut its policy rate by 0.50% as expected in its policy announcement today.
Next focus on the economic calendar is tomorrow’s PPI inflation report for November.
