Inflation

The annual inflation rate has dropped to 3.2% in October from its 2022 peak of more than 9% after the Federal Reserve embarked on an aggressive campaign to cool price pressures.

The bond market recovery has come amid some bouts of wild back-and-forth swings, yet is gaining ground since the Fed left its benchmark policy rate unchanged earlier this month.

The Federal Reserve released its semiannual financial stability report highlighting elevated asset values, funding issues and pockets of leverage as top concerns.

Inflation pressures are easing, which could give policymakers room to keep interest rates at or near current levels for the time being.

Much of the bullish case for emerging markets this year was predicated on a growth recovery led by China, which successive data releases have shown to be patchy at best and a non-starter at worst.

In a "Nirvana scenario" market experience all the gain (an end to nasty price increases for consumers) without much pain (a spike in unemployment or a major hit to the stock market).

Bostic said he agreed with the view that "the bar to justify further rate hikes is higher than it was a few months ago."

A key gauge of prices closely watched by the Fed continued to rise at a concerning pace. The core CPI rose 0.4% for a third straight month, in line with estimates.

Bond traders have overestimated month-over-month headline inflation heading into four of the last seven Consumer Price Index releases, says strategist Raghav Datla.

Some 90% of 288 respondents in a Markets Live Pulse survey said companies on both sides of the Atlantic have been raising prices in excess of their own costs since the pandemic began in 2020.