October inflation surprised to the upside in both the US and the euro area. In the US, price pressures broadened beyond energy, while Europe saw largely stable momentum in underlying inflation. Market-based inflation expectations fell over the past month as oil prices plunged, and even longer-term 5y5y inflation swaps declined by around 10bp in both the US and euro area. US CPI showed a slower easing than forecast: headline inflation moderated to 0.4% m/m SA from 0.6% in August, helped by retail energy prices rising less, yet core inflation printed 0.3%, with services doing much of the lifting. Shelter prices rose 0.3%, above 0.25% for a third consecutive month, while super-core services increased 0.52%.
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