Inflation impulse grips the US tightly

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news the fight against inflation is making little progress in the US.</p><p>First up, <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>the American inflation rate fell less than expected in September</strong></a> although the shifts were minor. It came in at 8.3% in August and was expected to fall to 8.1% last month. But in the end it came in at 8.2%. The key takeaway is that they aren't making any progress yet getting it down. Their 'core' rate was unchanged at 6.2% from a year ago. Month-on-month, the rate actually rose.</p><p>Clearly the Fed has more work to do to change the trajectory, and markets are assuming it will continue to fight inflation as its #1 threat. The next Fed hike is now expected to be another +75 bps. The US Treasury 10yr bond yield roared above 4% on the news, but it has settled back under since.</p><p>Their benchmark <a href="https://www.freddiemac.com/pmms" target="_blank"><strong>30 year fixed rate mortgage</strong></a> rose to 6.92% pa, plus points of +0.8%, hitting the 7% mark for the first time in more than 20 years.</p><p>New US <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20222016.pdf" target="_blank"><strong>jobless claims rose</strong></a> last week to just under +200,000, a six week high even if historically still very low. But the number of people on these benefits fell to just on 1.2 mln, a new records low. Their insured unemployment rate is now down to under 0.8% of their 155 mln employed workforce, the lowest ever in <a href="https://fred.stlouisfed.org/series/IURNSA" target="_blank"><strong>a record</strong></a> that goes back more than 50 years.</p><p>The US Congressional Budget Office <a href="https://www.cbo.gov/system/files/2022-10/58493-09_MBR.pdf" target="_blank"><strong>sa