Stock Market Update

The S&P 500 futures are up one point and are trading in line with fair value, the Nasdaq 100 futures are down 27 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are up 36 points and are trading 0.1% above fair value.

Total CPI increased 0.2% month-over-month in October (Briefing.com consensus 0.2%) while core CPI, which excludes food and energy, increased 0.3% month-over-month (Briefing.com consensus 0.3%). Those increases left total CPI up 2.6% year-over-year, versus 2.4% in September, and core CPI up 3.3%, unchanged from September.

The key takeaway from the report -- and perhaps calming influence -- is the understanding that the shelter index accounted for more than 65% of the total 12-month increase in core CPI, so the market is watering down the headline inflation print as not being as comprehensively inflationary as it seems. The unadjusted change in the all items less shelter index was just 1.3% year-over-year.

Treasury yields moved sharply lower in response. The 10-yr yield was at 4.43% before the CPI report, but sits at 4.38% now. The 2-yr yield, which is most sensitive to changes in the fed funds rate, moved to 4.25% from 4.35%.