Stocks Rally, Yields Plunge as Inflation Cools in October
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Consumer prices were unchanged in October as falling oil prices dragged down inflation. Core inflation rose at the slowest pace since September 2021.
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Stocks rallied strongly after the cooler inflation data, with the Dow up over 450 points, Nasdaq up 2.4%, and S&P 500 up 1.9%. Yields on 10-year and 30-year Treasuries dropped sharply.
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Airfares, rental cars, used cars, and some other categories saw notable price drops in October. But food and rent inflation remains persistent.
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Bond yields saw their biggest single-day drop since March, with the 10-year yield falling over 18 basis points. Investors are now confident yields will head lower.
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After the inflation data, markets are pricing in a near 100% chance the Fed keeps rates unchanged in December, ending its aggressive rate hike campaign for 2022.