CPI increased 7.1% from 2021, according to the Labor Department this morning. Economists surveyed by Dow Jones expected a 0.3% monthly increase and 7.3% 12-month rate, per CNBC.”]November Consumer Price Index (CPI) rose just 0.1% from October.

• The consumer price index rose just 0.1% from the previous month, and increased 7.1% from a year ago, compared with respective estimates of 0.3% and 7.3%.
• Core CPI rose 0.2% on the month and 6% on an annual basis, compared with respective estimates of 0.3% and 6.1%.
• Stocks roared higher following the report as investors look for signs that runaway inflation is ebbing.
• Inflation-adjusted average hourly earnings for workers rose 0.5% for the month, though they were still down 1.9% from a year ago.

CNBC’S Kelly Evans had this to say:

“The Prices Paid index of the monthly ISM manufacturing index hit a new cycle low of 43 last month, “a level consistent with sub-2% PCE inflation,” as MKM’s Michael Darda points out. (PCE is the Fed’s preferred inflation gauge, which was running at 6% year-on-year as of October.)”

“Bond market and monetary indicators now suggest the Fed is already beyond neutral,” Darda wrote two weeks ago. “Rates should continue to fall as growth continues to slow, headline inflation eases back to 2% by mid-2023 and core inflation falls back to 2% by the fall or winter of next year.”

“And sure enough, rates are plunging today. The 10-year Treasury yield collapsed by almost 20 basis points, from over 3.6% to nearly 3.4%, after the CPI report was released at 8:30 a.m. That lower yield will immediately translate into cooler mortgage rates. The two-year yield fell even more, as markets now see a much higher chance the Fed will back off more aggressive rate hikes in the near term.

Tomorrow, in fact, is likely to mark the end of the Fed’s string of 75-basis-point rate hikes. The expectation is for only a half-point rate hike at the conclusion of their policy meeting, but the market is clearly trying to tell the Fed it would like to see either just a quarter-point hike or even no hike at all.”