October 11, 2018
The risk that consumer prices may begin to accelerate is ultimately what's behind the Federal Reserve's plan to increase interest rates gradually through next year. But the September CPI report doesn't look very threatening, showing only 0.1 percent gains both overall and for the core with year-on-year rates moving in reverse. Very soft housing costs are behind the headlines.
Making headlines himself was President Trump who picked up his criticism of the Fed in a big way, calling its rate-hike plans, among other things, "ridiculous". Stocks didn't get much help from the day's news with the Dow adding to yesterday's 3.2 percent drop with a 2.1 percent dip to 25,052. The Nasdaq, which fell 4.1 percent yesterday, fell another 1.3 percent to 7,329.
Stability in the Treasury market, which fell sharply last week, is this week's good news. Demand for the 10-year Treasury improved for a second day with the yield down another several basis points to 3.15 percent. The dollar held steady yesterday but not today, falling 0.5 percent to 95.02 on the dollar index. Oil fell another $2 and is just below $70 while gold, which was flat yesterday, rallied nearly $30 on flight to safety to over $1,225.