U.S. Stock Market Indices move to new highs in part driven by earnings and the anticipation of U.S. tax reform or at least tax cuts against modest inflation increases. This optimism is due in part to the underlying economic conditions in Canada and the U.S. economic remain positive. The focus is and will be on inflation trends. Both the American and Canadian consumer price indexes (CPI) ticked upwards due in a large part to energy prices recovering.
North American Inflation Trends
In Canada, all eyes will be on September’s Gasoline prices rose 4.4% in the month, way above historical norms. The headline CPI expects to increase 0.3% and push the annual inflation rate up three ticks to 1.7%. The backdrop of this modest inflationary pressure is against the very strong first six months of GDP growth in the Canadian economy.
The U.S. September CPI increased 0.5%, following a 0.4% advance the prior month. The headline figure was lifted by a 6.1% spike in the price of energy, the steepest monthly increase for that category since June 2006.
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