John’s Finance Corner: Markets Eye Inflation and Labor Data Ahead of Fed Meeting
Last week, we received the delayed September Producer Price Index (PPI) report, which showed wholesale prices rising 0.3% from August and 2.7% year over year, both in line with expectations. Core wholesale prices excluding food and energy increased just 0.1% for the month and 2.6% annually, slightly below forecasts.
PPI data is used as one of the inputs for the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, scheduled for release on December 5th. While some pricing categories saw modest increases, the overall wholesale data is not expected to fuel a meaningful rise in the September PCE reading, which would be welcomed news for consumers and financial markets alike.
On the labor front, last week’s initial jobless claims fell by 6,000 to 216,000, marking the lowest level in two months. However, continuing claims, which track individuals receiving benefits beyond the first week, rose by 7,000 to 1.96 million one of the highest readings in four years. This divergence highlights ongoing weaknesses in the labor market. While a softer job market is not ideal, slower hiring trends could increase pressure on the Fed to implement additional rate cuts.
This week is shaping up to be critical as markets gather final insights ahead of the Fed’s next meeting. Even with the JOLTS report and BLS jobs report delayed due to the shutdown, we will still receive ADP’s November employment report on Wednesday, followed by the latest jobless claims figures on Thursday. The week concludes with the delayed PCE inflation report, a key indicator given that it is the Fed’s most closely watched measure of price stability.
With continued labor market weakness and an important inflation report ahead, this week’s data could heavily influence whether the Fed moves forward with another rate cut in December.
John Lamberg
MORTGAGE LOAN ORIGINATOR
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