Weekly Market Commentary October 9th to October 13th 2023

The scariest things this week, outside of Friday the 13th, were the inflation economic releases with the potential to impact the FOMC’s rate decision next month.

The Consumer Price Index (CPI), a measure of the change in price of goods and services paid by consumers, increased 0.4% MoM for the month of September. This was lower than the 0.6% reported for August and higher than the forecast of 0.3%. The CPI YoY was 0.1% higher than the forecast at 3.7%, which matched the previous month. If we look at YoY CPI excluding Food and Energy, which tend to be more volatile components, the figure was 4.1% with the previous month’s figure at 4.3%. The takeaway here is that core inflation is decreasing but is still higher than the Fed’s target and higher food and energy costs would negatively impact headline CPI.

The Producer Price Index (PPI), a measure of the change in price of goods and services sold to consumers which reflects the higher input costs of businesses, came in at 0.5% MoM for September. This was higher than the expected figure of 0.3% but lower than the previous month at 0.7%. PPI YoY also came in higher than the 1.6% expectation at 2.2% and the previous month which was revised from 1.6% to 2.0%. The PPI excluding Food and Energy YoY also came in higher than the expected figure of 2.3% at 2.7%. The previous month’s number was also revised higher from 2.2% to 2.5%. The story here is nearly identical to CPI. The lower food and energy prices are resulting in lower inflation figures.

The stock markets were mixed for the week. The S&P 500 was up 0.4% finishing the week at 4,328, while the Nasdaq decreased -0.2% to 13,407 and the Dow Jones Industrials rose 0.8% at 33,670. The 10-year Treasury yield decreased to 4.63% this week from 4.79% at the end of last week.

Next week’s releases to keep an eye on include Retail Sales and various housing data points.