Positive surprise

The US CPI figure of 3.2% for October that came out yesterday clearly shows inflation has cooled and confirms our belief that the Fed is close to having done its job in rising rates. Prices of all components of the inflation figure, except transportation and shelter, have been falling from the 40-year high reached last year. Financial markets reacted promptly with the S&P 500 up 1.9%, 10 year government bond yields down 20 bps to 4.43% and a weakening dollar. This positive surprise made our day and the trend remains positive in Asia this morning.