Markets rebound as inflation data improves

Dow advanced 564, advancers over decliners better than 5-1 & NAZ shot up 240.  The MLP index went up 3+ to 290 & the REIT index recovered 9+ to 400.  Junk bond funds were a little higher & Treasuries saw buying which lowered the relatively highs yields (more below).  Oil was off pennies in the 69s & gold bounced back a very big 41 to 2649.

Dow Jones Industrials

Prices barely moved in Nov but still held higher than the Federal Reserve's target when looked at from a year ago, according to a Commerce Dept measure.  The personal consumption expenditures price index, the Fed's preferred inflation gauge, showed an increase of just 0.1% from Oct.  The measure indicated a 2.4% inflation rate on an annual basis, still ahead of the Fed's 2% goal, but lower than the 2.5% estimate.  The monthly reading also was 0.1 percentage point below the forecast.  Excluding food & energy, core PCE also increased 0.1% monthly & was 2.8% higher from a year ago, with both readings also being 0.1 percentage point below the forecast.  Fed officials generally consider the core reading to be a better gauge of long-run inflation trends when it excludes the volatile gas & groceries category.  The annual core inflation reading was the same as in Oct while the headline rate rose 0.1 percentage point.  The readings reflected little increase in goods prices & a 0.2% rise in services prices.  Food & energy prices both posted 0.2% gains as well.  On a 12-month basis, goods prices have fallen 0.4%, but services have risen 3.8%.  Food prices were up 1.4% while energy fell 4%.  Housing inflation, 1 of the stickier components of inflation during his economic cycle, showed signs of cooling in Nov, rising just 0.2%.  Income & spending numbers in the release also were a bit light compared with expectations.  Personal income rose 0.3% after having jumped 0.7% in Oct, falling short of the 0.4% estimate.  On spending, personal expenditures increased 0.4%, one-tenth of a percentage point below the forecast.  The personal saving rate edged lower to 4.4%.

Key Fed inflation measure shows 2.4% rate in November, lower than expected

The 10-year Treasury yield retreated as a key inflation gauge showed cooler-than-expected price pressures.  The yield on the 10-year Treasury fell by 6 basis points to 4.50% after topping 4.57% in the previous session & the 2-year Treasury yield dipped 6 basis points to 4.25%.  The benchmark 10-year yield is still about 0.10% higher than the 4.40% level where it ended last week.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  Treasury yields surged on Wed after Fed policymakers increased their inflation forecast for the coming year & pointed to only 2 potential rate cuts in 2025, down from 4 potential cuts that had been signaled in Sep.  Fed Chair Jerome Powell flagged at a press conference after the central bank meeting that the 12-month inflation rate will top the central bank's 2% goal, estimating 2.5% for headline inflation & 2.8% for the core level, which excludes food & energy prices.  Powell nevertheless said the monthly move will be “much lower” than in previous months.  The US gov is currently on the brink of a shutdown as dozens of Reps voted against a spending bill backed by Pres-elect Trump.  The House Rep deal would have funded the gov for 3 months & suspended the debt ceiling for 2 years.  Without an agreement, a partial gov shutdown is expected to begin tonight.

Spike in 10-year Treasury yield this week eases a bit after lighter-than-expected inflation reading

Tesla (TSLA) reversed losses from earlier in the day to trade higher, putting the electric vehicle maker's stock on track to post a weekly gain.  On Wed, TSLA shares slumped 8% to post their worst day since before Donald Trump's presidential election victory in Nov.  For the week, TSLA shares are now up 0.2%.  Trump's win prompted a sharp rally in its shares, as investors increased their bets that the electric vehicle firm would benefit thanks to its CEO Elon Musk's close ties to the pres-elect.  The stock is still up 72% since Nov 5's market close, the night of the presidential vote.  Musk was appointed by Trump to co-lead the newly created Dept of Gov Efficiency, also referred to as “DOGE.”  The proposed presidential advisory commission's acronym shares the same name as the internet meme that inspired so-called “memecoin” cryptocurrency, dogecoin.  Last month, there was a report that Trump's transition team was planning to pursue a federal framework for regulating self-driving vehicles.  The move would offer a major boost to Musk's EV firm.  TSLA is staking its future on the idea of rolling out mass fleets of autonomous vehicles, known as “robotaxi” services.  At the firm’s “We Robot” event in Oct, Musk unveiled the firm's Cybercab self-driving concept car.  TSLA has yet to deliver on Musk's promise of offering truly autonomous vehicles.  Tesla's Autopilot & paid “Full Self-Driving” services still require a human behind the wheel to supervise the system's actions & take over if needed.  TSLA stock rose 4.20.

Tesla shares drop 1%, continuing decline as post-election rally loses steam

Stocks bounced back as investors digested key inflation data that showed a deceleration in price increases during the month of Nov.  The latest reading of the Fed's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, showed price increases decelerated in Nov on a monthly basis & came in below estimates.  But they still remained sticky as the central bank fights to bring inflation back down to its 2% target.  A Fed-induced sell-off earlier in the week left the major averages reeling as the central bank projected fewer rate cuts for 2025 than it had previously forecast.  Although stocks mostly stabilized yesterday, the threat of a gov shutdown, coupled with more Trump tariff threats on Europe, pressured global markets across the board.