INFLATION IMPASSE

October headline CPI was 0.4%, core was 0.3%, both unfortunately above expectations. Moreover, headline CPI jumped 0.4% in August and 0.6% in September, pushing the annualized three-month trend to a troubling 5.7%. As for core, it’s up 0.3% M-o-M three months straight, pushing the annualized three-month pace to 3.7%, the highest rate since 4/24. With inflation breadth measures rising, unless equities or oil sink, expect a 25bps December Fed hike.