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NIKKO MARKET COMMENTS
Prepared by
The Nikko Securities Co. International, Inc.
Economic News
Despite upward pressures from energy, tobacco, apparel, and airfares, consumer prices rose by only 0.2% in both overall and core measures in September. Compared with three months ago, overall CPI has risen at a 2.5% annualized rate; yet core CPI inflation has risen at a mere 1.7% pace. Year-to-year inflation for both measures stand at 2.2%. For the overall CPI, that's the lowest pace since 1987. Year-to- year core CPI inflation is the lowest since 1966, when the CPI was accelerating. The favorable inflation performance lifted the cloud of fear from the bond market, but most analysts still anticipate tighter Fed policy in response to labor market conditions. The weekly jobless claims again confirmed ongoing labor shortages. Initial jobless claims rose by 2,000, but. remain very low at 306,000. Continuing claims rose by 22,000 but the 4-week average barely budged. The insured unemployment rate is stuck at 1.9%. Business inventories rose by 0.2% in August, subdued by a 0.6% drop in retail sector inventories. The October Philadelphia Purchasing Index weakened to a 11.5% reading from 20.4% a month ago. Prices showed modest upward pressure this month. But a severe decline in delivery lag times and a negative reading for employment offered hints of moderating growth. Slower orders and shipment growth also contributed to the lower composite reading this month.
Robert A. Brusca, Chief Economist
The Nikko Securities Co. International, Inc.
One World Financial Center, Tower A
200 Liberty Street, New York, New York
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