October's Core PCE print ticks lower to 3.5% year-over-year, showing inflation to be cooling while still well above the Fed's 2% target. EY Chief Economist Greg Daco says, "increased evidence that the disinflationary process is underway," though headwinds like rent prices and tight monetary policies persist. Still, Daco believes the trajectory allows for further declines, moving toward eventual interest rate cuts by regulators. BMO Wealth Management US CIO Yung-Yu Ma argues "direction matters more than the timing." With markets revealing lower rate expectations, easing of financial conditions will translate into the real economy through things like borrowing costs. So while the market-implied inflation path likely "will not pullback too far" below 2% immediately, Ma believes sustained cooling momentum remains key. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
With volatility this low, the famous "Santa Claus Rally" may have already happened.
By Rob Lanphier, partner