UPDATE: The U.S. Consumer Price Index (CPI) report is poised to dominate financial markets today as analysts brace for a unique data release amidst the ongoing government shutdown. The U.S. Bureau of Labor Statistics (BLS) will not provide a full October report, leading to heightened anticipation and uncertainty among traders.
In a significant shift, market players will only receive data that bridges the gap between the September CPI report and what is expected for November. This unusual situation arises from the inability to collect critical price data in-person or by phone during October due to the government shutdown. However, the BLS may still disclose partial data, as over 20% of the CPI basket relies on online prices and private data sources, which do not require personal collection.
As the financial community awaits the report, experts warn that the BLS might focus on year-over-year figures instead of month-on-month changes.
“Because of the shutdown, the individual months will not be reported, just a price level for November,”
stated analysts at Morgan Stanley. This lack of clarity could lead to significant volatility in trading today, overshadowing decisions by the Bank of England (BOE) and the European Central Bank (ECB), which are expected to announce a rate cut and maintain current rates, respectively.
Analysts predict a slight uptick in core goods inflation as tariffs continue to impact the economy. However, seasonal factors, such as Black Friday price discounts, may introduce a downside bias to November’s price figures. As a result, the inflation landscape is anticipated to show light moderation in price pressures, which could influence market reactions.
Traders should remain vigilant as the CPI report is likely to drive trading dynamics today. Any unexpected inflation developments could prompt significant shifts in market sentiment. Despite the potential for initial volatility, analysts urge caution, suggesting that players may temper their reactions as the reliability of the October data remains in question.
As the financial world watches, the next Fed rate cut is not projected until June 2024, suggesting that investors may benefit from a measured approach amid this uncertain landscape. The evolving situation demands close attention, as today’s CPI report could be a pivotal moment for market participants navigating the turbulent economic environment.
