UPDATE: The highly anticipated US Consumer Price Index (CPI) report is set to be released today, with significant implications for key central bank decisions. Analysts are bracing for potential volatility in market conditions as the Bureau of Labor Statistics (BLS) navigates the fallout from the recent government shutdown.
Today’s CPI report will not include a full set of October data due to the ongoing effects of the shutdown. Instead, market players will receive a snapshot based on the September CPI figures, raising concerns about data reliability. October 2023 measurements will be particularly limited, as traditional methods of price data collection were disrupted.
The BLS typically gathers pricing information through in-person interviews and phone calls, which were not feasible during the shutdown. However, approximately 20% of the CPI basket is sourced from online prices and private data providers, suggesting that some insights may still be available in the report. November 2023 data could also be included, but the BLS might focus primarily on year-on-year comparisons rather than month-on-month shifts.
Morgan Stanley has flagged that due to the shutdown, “the individual months will not be reported, just a price level for November.” This revelation underscores the uncertainty surrounding today’s release; analysts are predicting that core goods inflation could rise slightly towards the end of the year, driven by tariffs impacting the economy.
As we approach the holiday shopping season, analysts also caution against potential seasonal factors, such as Black Friday discounts, which may exert downward pressure on November price figures. Consequently, market participants are urged to remain vigilant for any surprises that could emerge from today’s report.
The inflation landscape is expected to reflect continued moderation in price pressures, which could be the key takeaway once the dust settles. Traders and investors are likely to react strongly to the initial CPI numbers, overshadowing other significant events today, including policy decisions from the Bank of England (BOE) and the European Central Bank (ECB). Anticipation of a rate cut by the BOE contrasts with expectations of stability from the ECB, setting the stage for possible market fluctuations.
Despite the immediate focus on the CPI report, experts suggest that any major reactions may be tempered by the quality of the data. With the next Federal Reserve rate cut not expected until June 2024, there is little incentive for traders to rush into pricing decisions based on potentially flawed data.
As the situation develops, market players are advised to approach trading cautiously, keeping in mind the limitations of the reported data and the broader economic context. Stay tuned for breaking updates as the CPI report is released and its implications unfold.
