Fixed income markets spent the majority of this holiday-shortened week reversing last week's yield advances. However, yields remain markedly higher than where they began the month. Bond markets were impacted this week by fluctuating assessments of the likelihood a US-China trade deal would be reached soon. In addition, the week's economic data was not supportive of higher rates.
The most notable release was October's CPI report, which showed that core inflation rose at a smaller than expected pace during the month. The results were driven by an unexpectedly small increase in housing/rent costs. In addition, the tariff-driven increases in goods prices seen earlier in the year reversed for the second straight month. The CPI results were consistent with year-over-year PCE advances (the Fed's preferred inflation yardstick) of less than 2%. October's PCE measure is due on Nov. 27, and another low reading will reinforce the Fed's focus on supporting the business cycle.