Analysts from Wells Fargo, point out that economic numbers released during the week were mostly positive.
Key Quotes:
“Outside of the housing market, economic indicators this week were generally positive. The factory sector continues to signal a modest pickup. Industrial production released on Monday, Oct. 17, rebounded from a revised August drop, as manufacturing and mining rose. Stable energy prices have certainly helped put a floor on drilling activity in the mining sector, where production rose 0.4 percent in September. Manufacturing production was boosted most by nondurables while auto manufacturing, which has been a major source of growth this year, only contributed a minor uptick.”
“Auto inventories remain elevated, so a pullback in motor vehicle production in coming months is likely if sellers wish to limit discounting on car lots. Despite the improvement in September, production is relatively weak; therefore, we remain cautious on the near-term factory sector outlook.
“Inflation continues to firm, particularly on medical and housing costs for consumers, according to the CPI in September. Headline CPI rose in line with expectations at 0.3 percent on the month. Higher energy prices offset a weaker-than-expected gain in core inflation, narrowing the gap between headline and core. The gap between services and goods, however, remains steady. The measured rise in core CPI is unlikely to affect the FOMC decision in December but confirms the lack of urgency to move in the November meeting.”
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