Consumer Inflation Comes in Lighter than Expected

The consumer price index rose less than expected in November, an indication that while inflation is still a threat to the U.S. economy, pressures could be cooling.

The index, a broad-based measure of goods and services costs, increased 0.1% for the month and 7.1% from a year ago, according to a Bureau of Labor Statistics release Tuesday. Respective estimates from Dow Jones were for rises of 0.3% and 7.3%.

Excluding volatile food and energy costs, so-called core CPI increased 0.2% for the month and 6.0% on an annual basis, compared with respective estimates of 0.3% and 6.3%.

The price action suggests investors are betting that cooler inflation data influences the Federal Reserve enough to soften its aggressive rate hike strategy.

Market Reaction

Futures tied to the Dow Jones Industrial Average gained 754 points, or 2%. S&P 500 and NASDAQ Composite futures added 2.3% and 3%, respectively.

Treasury yields dipped on the news, driving the U.S. Dollar lower and dollar-denominated gold higher.