Everyone freeze and wait for CPI data today at 8:30am Eastern Time. 🥶
That will directly impact the market when it opens at 9:30am Eastern Time today.
With producer price index (PPI) rising by 0.4% yesterday, everyone is expecting the consumer price index (CPI) to increase today.
The producer price index is a measure of prices that U.S. businesses get for the goods and services they produce. On a 12-month basis, PPI rose 8.5%, which was a slight deceleration from the 8.7% in August but still slightly higher than forecasted.
For tonight's CPI, the target is 8.1% total inflation and 6.5% core inflation (excluding food and energy).
If we are on target, that will be a huge sigh of relief. Any numbers less than the targets, will probably lift the market. If CPI comes in hotter than expected,and the Fed gives another hawkish statement, then down the roller coaster we go.
A quick summary -
We are trending down in total inflation/CPI for the last two months, largely due to lower energy costs. However, core inflation is still stubbornly high. See first plot.
We see soaring rents over the last few months which contributes to core inflation. The second plot shows increased US rental increase and this is also seen in Singapore. Maybe higher interest rates is discouraging people to buy property and turn to rental housing instead? [Doubt] Air fares also remain high as people are also planning for year end trips and holidays.
Fortunately, there is some softening seen in other sectors of core inflation like transport, especially used cars sales. See third plot. Similarly, other categories, in particular retail are set to soften this month or in the near future as fears of recession loom.
Stay the course
All I hope is for CPI to not exceed the forecast by too much. A small miss of 0.1% might be acceptable. I dare not hope for a lower CPI, in case my hopes get crushed. [Happy]
The Fed will raise rates by 75 basis points in Nov, if CPI is lower than expected, or on target. They dare not relax. It would be 50 basis points in Dec too, cos that's the plan.
If CPI is much hotter than expected, we might see higher rate increase of 75 basis points in Dec., pending next month's CPI.
No 100 basis points in Nov. That would crash the markets.
That's how it will play out in my mind.
Now, let's wait and see. We have a few more hours of anticipation.
@TigerStars@Tiger_chat@MillionaireTiger
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Ok