After their survey of the Oct. 10-14 market week (2:13), Jeff Mayberry and Samuel Lau take a deep dive (23:50) into the household inflation expectations component of University of Michigan consumer-sentiment survey. The release of the preliminary October survey on Friday showed a rise in expectations of higher prices, rattling stock and bond markets. The report followed Thursday’s (10:05) Consumer Price Index report that showed a 0.6% month-over-month (MoM) rise in core consumer prices in September vs. expectations of a 0.4% increase, pushing the year-over-year (YoY) rise to 6.6%, its hottest number since August 1982.
Jeff and Sam also take a look inside core CPI, noting that while core goods prices decelerated to 6.6% YoY in September from 7.1% YoY in August, core services prices accelerated to 6.7% YoY from 6.1% YoY. A key culprit behind the higher services inflation was a rise in owners’ equivalent rent (13:53), up 0.75% MoM or 6.7% YoY. In terms of market responses to the week’s inflation news, Jeff and Sam take note of higher yields across the Treasury curve, especially a 19-basis point rise for week in the two-year Treasury yield (3:03) to 4½%, a level last seen in August 2007.
