URGENT UPDATE: The US Consumer Price Index (CPI) report is set to release today, potentially overshadowing critical decisions from major central banks, including the Bank of England (BOE) and the European Central Bank (ECB). With inflation data collection disrupted by the government shutdown, analysts are closely monitoring how this will impact financial markets.
Today’s report will not include a comprehensive analysis for October 2023, leaving a gap since the last full report in September. This unusual situation arises as price data collection, typically conducted in person or via phone, was not feasible during the shutdown. However, the Bureau of Labor Statistics (BLS) may still provide valuable insights, as approximately 20% of the CPI basket relies on online prices and private data sources.
Market participants are eager to understand how the BLS will format today’s release. Speculation suggests that the report might focus on year-on-year figures instead of month-on-month data. Morgan Stanley cautioned that, due to the shutdown, only a price level for November will be reported, further complicating economic forecasting.
Analysts predict that core goods inflation may rise slightly as tariffs continue to affect the economy. However, seasonal factors, such as potential Black Friday discounts, could exert downward pressure on November’s figures. Investors should prepare for volatility as traders react to these initial numbers, which are expected to be more impactful than the outcomes of the BOE and ECB policy decisions today.
The BOE is anticipated to announce a rate cut, while the ECB is not expected to change its rates. Given this context, the US CPI report may create significant trading conditions in the market. Analysts warn that despite any initial reactions, market players should remain cautious due to the questionable reliability of the October data.
As the inflation landscape evolves, a light moderation in price pressures is likely to be the key takeaway from today’s report. With the next Federal Reserve rate cut not anticipated until June 2024, the market may experience a tempered reaction to today’s findings, even if surprises in inflation developments occur.
Stay tuned for updates as the situation unfolds and the report is released.
